80 Swiss banks settled the tax dispute with the U.S. some four years ago – or at least that’s what they thought. But the Americans are asking for more.

A large number of Swiss banks opted to bite the bullet instead of being drawn into a protracted conflict with the U.S. judiciary: 80 so-called Category 2 banks participated in a U.S. program launched in 2013 to settle the tax dispute.

They were forced to plead guilty, transmit data to the U.S. and to pay a fine. The Department of Justice (DoJ) in January 2016 lauded its program as a success story – the fines had added up to more than $1.36 billion, a handsome return for the authorities of a rival financial market.

But Not the End

It turns out that this wasn’t the end to the story. More and more of the Category 2 banks have been asked to stump up for a second time, which raised the question whether a whole new wave of demands was about to reach Swiss banking. An insider, who requested anonymity, told finews.com that about a tenth of the Category 2 banks was likely to be ordered to pay more than originally envisaged.

Lombard Odier, the Geneva-based private bank, is one of them. Having been ordered to pay $99.8 million at the end of 2015, the DoJ followed with another request in August 2018 for $5.3 million. The argument was that the bank hadn’t revealed all the assets of U.S. clients that it ought to have.

In July 2019, the turn was on Banque Bonhôte, which had to pay $1.2 million extra. In January 2020, UBP faced a bill of $14 million and Coutts was ordered to pay $27.9 million. Erstwhile owner Royal Bank of Scotland footed the bill for Coutts – the international and Swiss business of Coutts had been sold to UBP in 2016.

Big Delta

There’s no clear pattern behind the payments and they probably aren’t connected to the four-year period of impunity agreed by the DoJ for Category 2 banks, which ran out this year.

It seems rather an issue of the U.S. authorities opting to pounce on glaring discrepancies. U.S. investigators today have a much clearer picture of untaxed money on Swiss accounts than they had in 2016, thanks to leaver-lists of banks, new transfer data and witness accounts of Swiss bankers. The Americans are presenting their case where they see a particularly big delta to the assets reported, according to the source.

Not So Thorough Compliance?

Apart from reports by banks themselves, reasons for the discrepancies may be down to cases of people with dual citizenship, who opted not to reveal their U.S. passport.

Also, there may be instances where compliance departments at banks have been less than thorough or where bankers didn’t reveal U.S. assets for fear of losing their clients.

No Involvement of Swiss Government

The Swiss government, which helped with the launch of the original program in 2013 isn’t involved in this latest round of punishment payments, according to a statement by the State Secretariat for International Finance (SIF) in Bern.

The Swiss banking industry doesn’t know how far the U.S. authorities intend to go but one observer noted that the proverbial lemon has been squeezed dry already.