Valiant Holding AG Enters DOJ Program for Banks; Others will Follow

With the Swiss Financial Market Supervisory Authority (“FINMA”) deadline ending today on December 9, 2013, Valiant Holding AG made it official – it is the first bank to officially announce its intention to enter the The Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the “Program”). While the first one to do it, Valiant Holding AG will definitely not be the only bank to do it. As Sherayzen Law Office predicted earlier, there will be an avalanche of Swiss Banks following in the footsteps of Valiant Holding AG.


On August 29, 2013, the U.S. Department of Justice (“DOJ”) and the government of Switzerland issued a joint statement instituting The Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the “Program”). Sherayzen Law Office, PLLC has covered the specific details of the Program in a previous article. Essentially, the Program functions as a voluntary disclosure program for Swiss banks, similar to the US Internal Revenue Service’s Offshore Voluntary Disclosure Program (“OVDP”) for U.S. taxpayers holding undisclosed offshore accounts. In general, in return for providing extensive disclosure of the accounts held by U.S. taxpayers, banks that qualify for the Program can avoid U.S. criminal prosecution.

As also explained earlier, the Program is only open to non-“Category 1” banks (fourteen Category 1 Swiss banks are already under criminal investigations by the DOJ, including Credit Suisse, Rahn & Bodmer, Zuercher Kantonalbank, Basler Kantonalbank, and Bank Leumi, among others). As I explained earlier in another article, under the Program, “Category 2” banks will face potentially substantial penalties.

There is actually fear that the costs of compliance combined with penalties will simply overwhelm a large portion of small Swiss banks, with some predicting the loss of at least one-quarter of the Swiss banks who enter the Program. It is not known whether Valiant Holding AG has sufficient resources to sustain the effort required to participate in the Program, though no one really raised this issue yet.

FINMA Deadline of December 9, 2013

According to Swiss regulatory officials, Swiss banks had it until today (December 9th) to notify the FINMA whether they intend to participate in the Program. This is why Valiant Holding AG announced its participation today.

FINMA Encourages Swiss Banks to Participate in the Program

Recently, various members of the FINMA, such as their CEO, Dr. Patrick Raaflaub, have issued statements and press releases encouraging various Swiss banks to enter the Program. (FINMA is responsible for implementing the Financial Market Supervision Act and financial market legislation, and according to their website, “As an independent supervisory authority, FINMA acts to protect the interests of creditors, investors and insured persons and to ensure the proper functioning of the financial markets.”) For example, in a recent edition of the Swiss Neue Zürcher Zeitung newspaper, Raaflaub emphasized the strong possibility that Swiss banks that chose not to enter the Program would likely face years of costly legal risks and even more coercive enforcement measures by the DOJ in the future. Further, although participation in the Program is onerous, he noted that it would provide participating Swiss banks with long-needed legal certainty.

Adding to the pressure that Swiss banks face is the fact that Raoul Weil, former UBS Chairman and chief executive officer of Global Wealth Management & Business Banking, was arrested in October while on holiday at a luxury hotel in Italy. Weil agreed to extradition to the US for trial for allegedly assisting U.S. persons in hiding $20 billion from the IRS.

The various public statements by FINMA, however, have understandably caused consternation among Swiss bankers. There is a sentiment in Switzerland that FINMA is not doing enough to protect Swiss interest and to counter the U.S. DOJ’s tactics.

Many Swiss Banks Likely to Enter the Program Following Valiant Holding AG

Despite the anti-US rhetoric, however, it appears that numerous non-Category 1 Swiss banks will follow the example set by Valiant Holding AG and will likely enter the Program today. According to recent US news reports, most of Switzerland’s approximately 300 or so smaller banks are expected to enter the Program (FINMA has not disclosed yet as to how many have done so). Therefore, Valiant Holding AG announcement, while somewhat historic, is not actually surprising.

A spokesman for Berner Kantonalbank noted that, “Participating in the program is absolutely an issue for us” and that the board would take a final vote on the matter; a spokeswoman for south Switzerland’s Corner Bank also stated that the bank was considering entering the Program. Other banks, such as Vontobel, EFG International, Banque Cantonale Vaudoise, St. Galler Kantonalbank, and Linth Bank, either have not made a decision yet, or did not issue public comments as of last week.

U.S. Taxpayers With Undisclosed Accounts In Valiant Holding AG and Other Swiss Banks Must Act Quickly

The Program presents a tremendous risk to U.S. taxpayers with undisclosed financial accounts in Valiant Holding AG and other Swiss Banks. Not only are their accounts likely to be disclosed to the IRS, but it will be done in a very short period of time.

As noted earlier, the due date for these banks is today; within a short period of time, Valiant Holding AG and other Swiss Banks will likely proceed with their disclosures to the DOJ and the IRS. In these case, U.S. taxpayers will likely face substantial civil and potential criminal penalties if they continue to hold undisclosed accounts or if their cases are not handled properly.

Therefore, U.S. taxpayers who either hold or previously held undisclosed bank accounts in Valiant Holding AG or any of the Swiss banks eligible for the Program should seek competent and experienced legal assistance as soon as possible to avoid potentially disastrous consequences.

Contact Sherayzen Law Office for Experienced, Professional Legal Help With Your Offshore Voluntary Disclosure

The experienced offshore voluntary disclosure attorneys at Sherayzen Law Office, PLLC can help with your all of your voluntary disclosure issues. We are a team of highly experienced team of international tax professionals who are dedicated to helping our clients. Our ethical creative balanced solutions have helped people throughout the world to properly disclose their foreign financial accounts to the IRS while avoiding the numerous voluntary disclosure pitfalls.

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