Swiss Banks to now implement FATCA
By: L. Speyer
On February 14, 2013 an agreement between the Swiss and United States governments was signed to implement FATCA (Foreign Account Taxation Compliance Act) in Swiss international financial institutions. Global implementation of FATCA will begin as of July 1, 2014. The adoption of FATCA by Swiss financial institutions comes as a huge blow to the international financial community. Initially, Switzerland’s financial institutions did not want to sign up for FATCA. Over the past three years pressure from other governments, such as Germany, Britain and France finally persuaded the Swiss to adopt FATCA.
Swiss banks are world renowned for their secrecy policies and role in aiding tax evaders. According to The Economist, Swiss banks will now be forced “into providing enough information, short of actual client names, to allow the Americans to make robust ‘mutual legal assistance’ requests that leave Swiss courts with no option but to order banks to provide clients’ personal details.”
With FATCA in place, Swiss banks (or any foreign financial firm), will now be forced to surrender all personal information of any American account holder with a balance of $50,000 or more directly to US authorities. Individuals must report bank balances of $10,000 or more under U.S. FBAR legislation. Any bank that does not hand over the requested personal information on its American clients will face stiff penalties.
Under FATCA, banks may be required to withhold 30% of their client’s foreign earned financial income. Over the years, Swiss banks have aided in the tax evasion of billions of dollars by American tax payers. The U.S. Treasury Department is now aiming its sights on Swiss banking giants Credit Suisse and Julian Baer after prosecuting and forcing the closure of one of the oldest private Swiss banks, Wegelin. Over the next ten years, the U.S. government hopes to collect approximately $10 billion through its new legislation. Come the first of July, Switzerland will no longer be the banking haven it has been known to be.