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Swiss firms continue to feel offshore compliance pressure

Troubles continue for Swiss banks dealing with the long-running enforcement campaign by U.S. authorities on offshore account reporting.

The story has been building since 2009, when the Swiss banking giant UBS paid $780 million to settle charges that it facilitated tax evasion by U.S. account holders. Last year, Credit Suisse Group AG paid $2.6 billion - and ended up pleading guilty to criminal tax charges.

In this post, we will update you on a new analysis by the Wall Street Journal on the extent of the Swiss banks' difficulties.

The Journal's analysis shows how the pressure to comply with offshore reporting requirements does not only affect big banks and individual taxpayers. Smaller financial institutions are also affected.

It isn't only big international banks such as UBS or Credit Suisse that have done business with Americans with offshore accounts. Lots of smaller Swiss financial firms have done so as well. These firms include insurance companies, mortgage lenders, asset-management groups and various corporate service providers.

As the U.S. crackdown has unfolded, many Swiss firms have sought to enter the U.S. Justice Department's Swiss Bank Program. The program offers an opportunity for Swiss firms to resolve possible criminal tax evasion charges. In return, the firms must disclose certain information about their account holders and pay appropriate penalties.

The banks in the program have already paid more than $360 million to resolve their cases. And there are another 40 firms that are negotiating with the Justice Department about participation.

The ongoing compliance pressure on foreign financial institutions inevitably turns up the pressure even more on individual taxpayers to comply with any unmet offshore reporting requirements. We will address that subject in an upcoming post.

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