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2016/03/30 12:35:00 GMT+2

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The US Program: where do we stand?

The US Program: where do we stand?

A milestone has been reached: with the conclusion of the NPAs for the Category 2 banks, a foundation has been established that provides legal certainty. However, the end of the US tax dispute is not in sight just yet.

On 27 January, the US Department of Justice (DoJ) announced the conclusion of the Non-Prosecution Agreements (NPAs) with all Category 2 banks. In total, 80 institutions were able to put an end to the tax dispute in this manner. The conclusion of these agreements signifies that, as part of the process for resolving past issues with the US, an important phase of the US Program has been completed.

An important phase of the US Program has been completed.

Although the settlement of the tax dispute with the US is taking longer than expected, the conclusion of the NPAs provides a foundation for legal certainty for the future. The Swiss banking institutions can now focus on their corporate policy in the coming years.

Execution of the Program – a bumpy process

Concluding the NPAs was no simple undertaking. Generally, it can be said that the outcome of the regularisation of the past with the US was expensive for the banks. In addition to the fines to be paid, very high administrative and internal costs were generated. Furthermore, the DoJ’s lack of transparency with regards to the calculation of the fines also leaves somewhat of a bitter aftertaste in terms of whether the fines were really always calculated fairly. The DoJ’s program for Swiss banks, however, remained the only practicable way to be able to look ahead to the future.

The DoJ’s program for Swiss banks remained the only practicable way.

Further steps

With the conclusion of the NPAs, an important milestone has now nevertheless been reached. That being said, however, the US Program has not yet been fully executed. The NPAs remain in effect for a further four years from the date of signing, and will be monitored by the DoJ for the duration of this period. As a result, questions could arise that affect all participating banks. An important part of the execution is also support in the form of administrative assistance in tax matters. The Association Program 2013, which was founded with the support of the Swiss Bankers Association (SBA) after the publication of the US Program in late summer 2013, will continue to provide a platform for the joint establishment of basic principles and for the coordination of the actions to be taken by its member-banks.

The Association Program 2013 will continue to provide a platform for the joint establishment of basic principles...

Categories 3 and 4

The Program has yet to be concluded for the banks in categories 3 and 4. Following the assessment of the documents that were submitted, the banks in these categories could be expecting Non-Target letters. Exactly how much time this will require remains unknown. The SBA hopes that the proceedings against Category 1 banks for the resolution of the tax dispute will now also be expedited.  

The SBA will continue to closely follow the developments in the execution of the US Program, and will have regular exchanges with the Association Program 2013.

...and for the coordination of the actions to be taken by its member-banks.