The Justice Department recently released a modified version of its model non-prosecution agreement with certain Swiss banks. In August 2013, the Justice Department released a model non-prosecution agreement that applies different terms to different categories of Swiss banks. Under the agreement, a category 2 bank is a Swiss bank with reason to believe that it committed a tax related offense under title 18 or title 26 of the United States Code or a monetary transaction offense under section 5314 or section 5322 of title 31. The program provides that the DOJ will agree not to prosecute these banks if the banks, among other things, pay a penalty ranging from 20 to 50 percent of the maximum aggregate value of undisclosed U.S. accounts.
In October 2014, 73 category 2 Swiss banks sent a letter to Thomas Sawyer, Senior Counsel for International Tax Matters with the DOJ, communicating their objections to the original non-prosecution agreement. In particular, the banks objected to having to cooperate with investigations by both domestic and foreign law enforcement organizations other than the Department of Justice. The DOJ addressed this concern in the revised non-prosecution agreement, which does not reference foreign law enforcement organizations. The banks also expressed concern regarding the requirement that they disclose information about their owners. The revised agreement obligates banks to disclose “all material information…that is not protected by a valid claim of privilege…with respect to the activities of [the Swiss bank], those of its parent company and affiliates…and others…”
By January 1, 2014, approximately 106 category 2 Swiss banks had sent the DOJ letters of intent to participate in the program.
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