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DoJ extends Swiss banks’ time to show clients were clean

The U.S. has given Swiss banks more time to show some Americans’ accounts were not used to evade taxes in a program that has banks deliver account data to avoid criminal prosecution.

The Department of Justice has given as many as 106 banks until July 31 to demonstrate that an account was not undeclared or that an undeclared account was disclosed to the U.S. Internal Revenue Service. The original deadline was June 30.

“This extension certainly confirms that the requirements are very hard to meet,” said David Fidan, partner at Deloitte AG, which is helping banks in the process. Giving the banks more time to comply will probably mean lower penalties for them, he said in an emailed response to questions.

The program to exchange information against non-prosecution agreements is part of a U.S. crackdown on tax evasion that led to Credit Suisse Group AG agreeing to pay $2.6 billion last month. Julius Baer Group Ltd., the country’s third-largest wealth manager, and Pictet & Cie. Group SCA, its largest closely held private bank, are among banks still under investigation.

“The Tax Division recognizes the difficulty that some Swiss banks have encountered in obtaining proof that an account was not an undeclared account or was timely disclosed by the Swiss bank to the IRS,” the Tax Division said in a statement published on the DOJ’s website yesterday.

The banks must disclose the total number of U.S. accounts since 2008, their highest dollar value, and the employees who managed them, according to a statement signed by the U.S. and Swiss governments on Aug. 29.

To gain non-prosecution deals, banks must pay 20 percent of the value of accounts not disclosed to the IRS on Aug. 1, 2008, 30 percent for such accounts opened between then and February 2009 and 50 percent for accounts opened afterward.

The banks include Cie. Lombard, Odier SCA, Geneva’s oldest bank, and BSI Group, the Swiss private bank owned by Italy’s Assicurazioni Generali SpA.

Other banks that have said they are participating include Union Bancaire Privee, the Geneva-based bank founded by Edgar de Picciotto in 1969, and Edmond de Rothschild Group, owned by Baron Benjamin de Rothschild.

With assistance from Giles Broom in Geneva.

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