Swiss banks are ready to pay hefty fines for sheltering United States tax fugitives under the terms of a new deal given the green light by the Swiss government on Wednesday.

While official details will not be concluded until the United States signs the agreement, both the cabinet and the Swiss Bankers Association (SBA) said the deal should finally settle past misdemeanors to the satisfaction of all parties without breaking Swiss law. “The signing of the joint statement should enable Swiss banks to resolve the tax dispute with the United States,” the government said in a short statement. The SBA hailed the agreement as the “final step towards a solution”, adding that “the protection of employees [threatened with criminal prosecution in the US] can now be afforded to the best possible extent.”

The agreement between the Swiss government and banks sidesteps the need for parliamentary approval, a crucial point given the rejection by both houses of parliament in June of the so-called Lex USA deal that promised to find an earlier solution.

According to the United States Justice Department, the total penalties expected to be levied against banks under the agreement will amount to hundreds of millions and possible over a billion dollars. Read More