Let's take a look at one of today's articles. Swiss banks sign up to reveal hidden accounts (Yahoo Finance 12/22/13), here. Here are some of the key excerpts for this discussion.
Around 40 of Switzerland's some 300 banks have already said publicly they will take part in a US programme set up to allow Swiss financial institutions to avoid US prosecution in exchange for coming clean and possibly paying steep fines.
* * * *JAT Comment: I think the program is targeted to those who actively wooed such clients. And, by the same token, since all is relative, it is only the very bad banks that are likely to draw the DOJ fire if they don't join the program.
Banks that opened undeclared accounts for US clients -- especially the ones that actively wooed such clients -- definitely should join the programme, experts say.
* * * *
Most so far are signing up for category two and thereby acknowledging they may well have had US clients with undeclared accounts.JAT Comment: I don't think banks are joining as Category 2 without some more belief than that they may well have had such U.S. clients with undeclared accounts. Merely having U.S. clients with undeclared accounts is not the problem for those banks; it is those banks actions to become complicit in the U.S. clients' failure to report the accounts. If the only problem were that U.S. clients did not comply with U.S. law, the banks would have no criminal exposure.
"More banks have said they will go for category two than would be expected," said Walter Boss, a tax lawyer with Poledna Boss Kurer AG in Zurich.
Category three, reserved for banks that aim to prove their innocence, "won't be crowded, it looks like," he said.JAT Comment: This would indicate that the problem is wider-spread than I initially thought.
Especially surprising perhaps is that a large majority of the publicly backed cantonal banks, which are regionally based and have long insisted they never went after US clients, have opted for category two.
All the banks rushing to the confession booth have not necessarily committed any misdeeds though, experts say.
A number of banks insist they have only had a few US clients and have never done anything to encourage tax evasion, but have chosen to initially join category two for fear that a single tax-dodging American, even unbeknownst to them, could land them in legal qualms.JAT Comment: The last paragraph is over-hype. The well-counseled would know that they don't have a problem with "a single tax-dodging American."
"I think the fears in Switzerland are too big when it comes to the United States," said Peter Viktor Kunz, a business law professor at Bern University.
"I really hope that common sense prevails in the end," he said.
Switzerland's third-largest bank, Reiffeisen, and private bank Vontobel have for instance said they will opt for category three or four, reserved for local banks with no US clients at all, which should show some of the smaller banks with few US clients that the self-flagellating is unnecessary, Kunz said.
Banks in category two will face penalties equivalent to between 20 and 50 percent of the value of undeclared accounts, depending on when they were opened, not to mention towering legal and translation fees.
"Many of the smaller banks simply will not be able to afford this," Hornung said, cautioning that a number of banks might go belly-up.
He urged banks that had done nothing wrong to opt out of the programme altogether, insisting that Washington was not interested in hunting down the minnows in the pond.