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How will the US tax crackdown affect the Swiss banking industry?
by Eleanor Lawrie on Mar 21, 2014 at 11:05
Meanwhile, Coutts’ parent group RBS disclosed in its results at the end of February that it had ‘notified the DoJ it intends to participate in the programme based on the possibility that some of its clients may not have declared their assets in compliance with US tax laws’.
Costs ‘in the billions’
Al Alevizakos, a banking analyst at Mediobanca, agreed with Summers that the cost to the industry as a whole is going to be ‘certainly in the billions’.
‘While this is for undeclared assets, if something else was found, like money laundering, the fines could go up,’ he said.
He welcomed the idea of banks placing themselves in category two, because selecting a less serious category could leave the business open to litigation at a later date, if any wrongdoing was found.
While category two banks are admitting some liability, John Cassidy, a tax investigations partner at accountancy firm Crowe Clark Whitehill, has some sympathy for them.
He said that firms can find it hard to stop investors from exploiting offshore tax havens because of confidentiality laws.
‘I have had many clients with Swiss bank accounts that have had them for all the right reasons and are looking for private bank expertise, but among these people there will always be those who take advantage of confidentiality,’ he said.
‘It is widespread in that there will be cases in just about every bank. That does not mean they were part of it, it means there is a person who was. There are a few bad apples in the barrel.’
Sebastian Dovey, managing partner at wealth management consultancy Scorpio partnership, said the probe could even be cathartic for the industry.
‘We see this as a turning point in the industry, which is that global wealth management should be based around fully tax compliant assets. They are definitely making sure the Swiss banks stay in line,’ he said.
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