WSJ Article Summarizing Information from U.S. DOJ Swiss Bank Program (10/29/15)

I am behind on reporting this article.  Laura Saunders, Inside Swiss Banks’ Tax-Cheating Machinery (WSJ 10/22/15), here.  For those who have not read it, I do recommend the article.  Although most readers of this blog are aware of the Swiss bank issue, this gives some facets that many may not have considered.  Laura is an excellent reporter and compiles some interesting information from the NPAs that have been reached with Category 2 banks under the U.S. Swiss Bank Program, here.

Laura concludes the article as follows:

The Justice Department said it hopes to reach settlements in this program with other Swiss firms by year-end. Lawyers for U.S. account holders and Swiss banks familiar with Justice Department efforts said that six to eight larger banks remain in separate talks with U.S. authorities. 

Meanwhile, U.S. officials said they are mining the extensive data uncovered by the program, including the destination of funds transferred out of Swiss accounts, to pursue leads around the world.

And, perhaps more to the point for readers:

1. I presume that the six to eight banks are in the group designated as Category 1 which were under criminal investigation prior to the program and thus ineligible for Category 2 treatment.

2.  It is interesting that the Swiss banks under criminal criminal investigation falling into Category 1 that have not yet been outed publicly by DOJ and IRS are not yet on the IRS list of Foreign Financial Institutions or Facilitators, here.  In some sense, those banks are probably the worst offenders; certainly many, even most, of the Category 2 offenders on the list are lesser offenders than the Category 1 banks not yet named.  Yet, the depositors in those disclosed Category 2 banks are treated worse if they attempt to join OVDP than are the depositors in the Category 1 banks.  Of course, the fact that Category 1 banks are under grand jury investigation would itself be secret, but the DOJ itself indicated that banks were under criminal investigation and word as to which banks has been on the street for some time.  To the extent that the IRS has information independent of the grand jury (most likely from OVDP disclosures), that information would not be grand jury information subject to secrecy rules but would likely be tax return information of the taxpayer making the disclosure which is also subject to secrecy rules.  I would suspect that, if the IRS wanted to avoid conferring better treatment on Category 1 depositors than Category 2 depositors, it could find some creative way (perhaps waiver by the cooperating taxpayer) so that at least the name of the bank could be disclosed. But, the disclosure of those banks without some announcement of John Doe Summons or criminal action (indictment, NPA, DPA, etc.) would permit an inference that they were under grand jury investigation and that alone might be a violation of the grand jury secrecy rules.