Americans And Swiss Banks

The effect of the Swiss FATCA is that one of the biggest benefits of having a Swiss bank account, secrecy, is no longer available to Americans.

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Swiss banks for centuries have been presented to the world as a lucrative, luxury place where the uber rich, or even the Nazis, can store their wealth. The reason for the allure of Swiss banks is their low levels of financial risk, high levels of privacy (the Swiss Bank Law of 1934 made it criminal for Swiss banks to disclose the name of an account holder except in case where severe criminal activity is suspected), and low levels of financial risk due to the relative stability of the Swiss economy.

However, for the past seven years, Americans have been largely unable to open a Swiss bank account and, therefore, unable to reap its benefits. Under the Swiss Foreign Account Tax Complaint Act (FATCA), which came into effect on June 30, 2014, Swiss financial institutions must provide U.S. tax authorities (IRS), directly with the account information that is subject to reporting with the consent of the clients concerned. Where the client does not consent, the IRS can nonetheless seek disclosure of a specific client’s account information. The effect of the Swiss FATCA is that one of the biggest benefits of having a Swiss bank account, secrecy, is no longer available to Americans.

In response to the Swiss FATCA, rather than agree to disclose the American client’s information to the IRS, many Swiss banks have instead decided not to allow Americans to open bank accounts at all. The implied reasoning being that Swiss bank accounts would rather not have to deal with the American formalities and would instead like to conduct business as usual.

Since then, the relationship between Americans and Swiss banks has been largely quiet, with most Americans accepting their lack of access to the elusive Swiss banking system.

However, a whistleblower who formerly worked at Credit Suisse, one of the largest Swiss banks, has recently come forward, alleging that Credit Suisse continued to help rich Americans hide their wealth from the IRS, resulting in possible heavy fines and a re-evaluation of whether the protections put in place by the Swiss FATCA are sufficient. This is particularly damaging given the $2.6 billion fine Credit Suisse paid after lying to federal prosecutors, the IRS, and members of Congress about helping Americans defraud the U.S. government in May 2014. Credit Suisse was in part spared a higher fine as they promised the Justice Department and Senate panel that they had stopped the practice and would disclose all uncooperative American account holders.

Pending any decision or settlement in the new Credit Suisse allegations, the future of American and Swiss banks hangs in the balance. Will the U.S. seek harsher penalties for Americans not sharing their Swiss bank accounts with the IRS? Will Americans ultimately be officially banned from holding Swiss bank accounts? Will Switzerland stop cooperating with the U.S. altogether to retain its integrity?

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Unfortunately, none of these questions have concrete answers. For now, Americans still holding Swiss bank accounts should consider themselves lucky and hold on tight.


Maya Cohen is an associate at Balestriere Fariello and has a background
in international law and arbitration. She focuses her practice on
complex litigation from investigations to trials and appeals. You can
reach her via email at maya.cohen@balestrierefariello.com.

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