It is important to note that the agreed US Tax Program contains nothing about the possible withdrawal of a participant. Hence leaving the US Tax Program plunges the banks that recently chose this option into an unknown world and unstructured process. The banks could then be assimilated to what is referred to as ‘Category 1’ banks, i.e. the banks that were already under investigation by the US Department of Justice (DoJ) at the time of the publication of the US Tax Program August 29, 2013. They are excluded from the Program and have to provide individual delivery of US requested information. They need to find a solution based on direct negotiations with the DoJ and the fines are defined on an individual basis. In order to minimize this risk, banks need then to explain why they first signed up to Category 2 at the end of 2013 and why they now decide to get out of the US Program.
The issue says the Agefi is that during the period between the two decisions the institutions have transmitted a considerable mass of documents containing incriminating evidences.
Why actually leave the US Tax Program? If a Category 2 bank comes to the conclusion that it did not infringe the US law, it should join Category 3 rather than leave the Program. Category 3 implies being able to prove that no wrong-doing took place and confirm that effective compliance programs are implemented. No a penalty needs to be paid but the high handling costs endured by fulfilling the requirements of the Program is born by these banks.
They could make an alternative calculation in assessing the cost they would incur if they were subjected to the same rules as banks Category 1. A simulation based on fines paid by Wegelin, Leumi or partly Credit Suisse shows that it would probably cost less in regards to the assets held, but it would be calculated over a longer period –Category 2 has the advantage of cover a period of five years against ten Category 1. It also has the advantage of putting a stop to the high cost of the compliance to US Program.