Now that summer has turned to fall, we start bidding adieu to the summer corn and say hello to fall greens.
The U.S. government and Switzerland have reached an agreement that could expose Americans who have used Swiss banks to avoid paying taxes.
The agreement will allow Swiss banks to settle any potential U.S. charges if they disclose extensive information about their American clients, the value of their accounts and any help they received from tax professionals.
Those settlements would include penalties for Swiss banks that helped their U.S. customers avoid taxes, according to a senior Justice Department official.
The total penalties could top $1 billion, the official said. The department could also use the information to prosecute Americans for tax evasion.
JEREMY HOBSON, HOST:
From NPR and WBUR Boston, I'm Jeremy Hobson. It's HERE AND NOW.
Today, Swiss banks will be digesting some new restrictions on secrecy. The U.S. Justice Department announced a deal with Swiss authorities yesterday that requires Swiss banks to pay fines that could reach into the billions of dollars. They'll also have to disclose information about American account holders. Marty Schenker is the executive editor of top news for Bloomberg, and he is with us now to discuss. Hi, Marty.
MARTY SCHENKER: Hi, Jeremy.
HOBSON: Well, tell us, first of all, about the deal that was announced yesterday between Swiss authorities and the U.S. What does it do?
SCHENKER: Well, basically it - for those banks eligible to reach an agreement, they will have to pay - they can escape criminal prosecution if they pay fines and give up the names of people who hold secret accounts in Switzerland.
HOBSON: And it doesn't involve all Swiss banks, right?
SCHENKER: No, because there are a number of banks who are currently under investigation for criminal prosecution, for helping customers hide income in those secret accounts. And those folks will have to face the music at some point. Those prosecutions will continue and they're not eligible to join.
HOBSON: Now, is this all about tax evasion, about people in the United States who are putting their money in Swiss banks to avoid taxes? Or is it also about shady characters trying to move money around without the authorities seeing what they're doing? Or what is this about?
SCHENKER: It's mostly about tax evasion. It all started in 2009 with a big settlement with UBS, the big Swiss bank. UBS paid $780 million and turned over 45,000 client names, and that basically was the beginning of a call to all Swiss banks, you better stop helping Americans evade taxes.
HOBSON: And how much money does the U.S. lose each year from Americans hiding their money abroad?
SCHENKER: I'm not sure about the yearly figure, but Senator Carl Levin, who's been looking into this issue for a long time, estimates there's $1 trillion in illegal accounts around the world, not just in Switzerland. And that it means up to $70 billion in lost tax revenue to the U.S. government.
HOBSON: Wow. And, of course, putting money in a Swiss bank is not the only way to hide your money. You can also - there are islands in the Caribbean that are dedicated to this kind of thing. And as you have reported at Bloomberg, some people just renounced their U.S. citizenship to avoid taxes.
SCHENKER: It really is extraordinary. In the first half of this year, one - over 1,100 Americans had walked into their embassies and basically turned in their passports versus only 235 for the whole of 2008. And these are people who just are calculating it's better not to be a U.S. citizen than to face having to pay taxes or prosecution.
HOBSON: I think one of the famous examples of that was Eduardo Saverin of Facebook fame, one of the early members of the Facebook team with Mark Zuckerberg, who I believe renounced his citizenship. Marty, what does all of this do to the Swiss banking industry, this deal with Switzerland?
SCHENKER: Well, you know, it used to be that if you were a serious player in the world banking, you had to have a Swiss private bank, but that's not the case anymore. The number of Swiss private banks is shrinking. A lot of the big banks are getting out of the business entirely. It's just not worth the hassle. So there will be consolidation and a lot fewer private banks.
HOBSON: Marty Schenker of Bloomberg News, thank you so much.
SCHENKER: You're welcome.
HOBSON: And we were talking about a deal announced yesterday by the U.S. Justice Department with Swiss authorities that requires Swiss banks to pay fines, could reach into the billions of dollars, and disclose information about American account holders. And as Marty says, it's mostly about tax evasion. We'll be back in a minute with more. HERE AND NOW. Transcript provided by NPR, Copyright NPR.