Last week, Swiss private bank Wegelin admitted to allowing more than 100 US citizens to hide $1.2 billion (£0.75bn) from the Internal Revenue Service for almost 10 years.
The bank accepted fines of $20 million (£12.5m) of restitution, a $22m (£13.7m) fine and $15.8m (£9.84m) more for fees and agreed to shut down its banking operation.
Although it's the first Swiss bank to close down its processes, it's not the first one to face fines and scrutiny from the US.
In 2009, UBS settled with the US government after admitting to tax evasion to the tune of £12m (£7.5m). Originally, the US demanded that the bank hand over 52,000 customers' details – a request too great for the Swiss government to agree to.
Eventually the two sides agreed on a deal after the two houses of the Swiss Parliament agreed to forgo a national referendum on the matter and instead adhere to an earlier deal.
Under the agreement, Switzerland promised to disclose information on 4,450 UBS accounts held by wealthy Americans suspected of evading taxes. The accounts, some with multiple owners, held $18bn (£11.2bn) at one point, according to the US taxation body the IRS. UBS promptly stopped offering offshore accounts to American clients.
After announcing a crackdown on tax evasion, US officials offered 11 Swiss banks a deal that would waive criminal prosecution in return for disclosing full information on their US offshore business in December 2011.
Most of the banks agreed to some sort of deal; HSBC, Credit Suisse and Julius Baer have already passed on about 10,000 employee names in an attempt to avoid the fate of Wegelin.
But is the reputation for Swiss banking now irreversibly tarnished? And will we genuinely see a more transparent banking system as a result? Or will the same practices continue once the media maelstrom has calmed?
What Has Changed After Wegelin?
Jason Stather-Lodge, chief executive of OCM Wealth Management told the Huffington Post UK that Wegelin's agreement to cease operating as a bank was a "watershed moment" for the industry.
"It will act as a deterrent to both the individuals and the banks - wherever they may be in the world - who are engaging in unlawful conduct that deprives the US Treasury of billions of dollars of tax revenue.
"Our stance at OCM is that it appears to have taken a long time to get to a stage where wilful abuse of the system and flouting of laws is to finally be sanctioned. It should have happened sooner."
Sally Brown, international tax associate at Milestone International Tax Partners, agreed that the Wegelin case would cause alarm bells to ring out across the Alps.
"Tax evasion is not, strictly speaking, a crime in Switzerland," she told HuffPost UK.
"Coupled with its deeply entrenched privacy laws, it was considered normal practice (and indeed, legal) to perform business in this way. The result is that most Swiss banks will now be running to the mountains – reviewing their structures, business activities and way they approach foreign clients."
Despite being legal in Switzerland, both UBS and Wegelin's fines were because they actively encouraged Americans to commit tax evasion. As a result, other Swiss banks will now want to appear to ‘clean up’ so as not to face a similar indictment.
"America has a deep pool of wealthy investors, and the banks will not want to risk losing this business," Brown added.
Others believe it's already too late however, and that Wegelin's demise has already made it more difficult for our US cousins to bank with Swiss banks. Wegelin's defence centred on the fact it only had branches in Switzerland, and therefore should only be held to Swiss laws, but this was disregarded by the US.
As one private banker told Reuters: "Wegelin was seen as a case apart because it appeared wilfully to antagonise US authorities by soliciting money flowing out of UBS after its settlement of US tax evasion charges.
"Wegelin openly flaunted what they were doing in front of the US authorities, as if to say 'you can't get us'. Well, actually, they did."
Hugh Morris, vice president of business development banking at business services firm Genpact, told Huff Post UK the Wegelin case meant it is unlikely that US citizens will be able to bank easily in Switzerland in the future.
"Smart Swiss banking executives and non-executive directors, with an eye to the future burden of regulation need to be tasking teams with rebuilding current processes to be inherently transparent, and to utilise approaches based on inbuilt compliance and inspection," he said.
"This will ensure an immediate reduction in risk and the demonstration of trust to investors and regulators."
The bottom line is, the 'Swiss defence' will no longer be tolerated, and existing US customers of Swiss banks are at a greater risk of being "shopped" to the IRS than ever before.
And banks sticking their heads in the sand and waiting for the fuss to die down isn't an option either.
The US is rigorously attacking tax evasion and its crackdown looks set to continue apace with the implementation of Fatca, the Foreign Account Tax Compliance Act, which requires foreign banks to disclose US account holders' balances, receipts, and withdrawals to the IRS, or be subject to a 30% withholding tax on income from US financial assets held by the banks.
Indeed, tackling the problem head on is recommended by banking experts. Daniel Senn, a Zurich-based partner at accounting firm KPMG, told Reuters: "Uncertainty is the worst possible of situations for private banks, and I believe Wegelin's competitors will be immensely relieved the Sword of Damocles has been removed and their own negotiations can begin moving forward constructively."
Will Switzerland lose its clientele?
If the veil has been lifted on the obtuseness of bank account ownership, why would investors continue to bank in Switzerland?
"Bank secrecy, as enshrined in the constitution, has previously been the cornerstone of Switzerland's success as a financial services centre. Without this secrecy, it has little to distinguish itself from London, New York or Frankfurt. The cosy days of numbered accounts, fiscal black holes and the shroud of bank secrecy are well and truly over. And not a minute too soon," Brown told Huff Post UK.
However, the recent furore could actually attract more customers to the banks – both UBS and Wegelin fiercely defended their clients actions, meaning the banks' reputation for being loyal is relatively intact.
That doesn't mean they can get lazy though – the interconnectedness of the world means that they banks will now have to compete on an international scale with other wealth operations.
"In future, Swiss banks will need to compete on client service, cost of service and product penetration, rather than just relying on secrecy (a sort of ‘off radar’) offering as their unique differentiator," said Genpact's Morris.
"In that regard, Swiss banks will become much more akin to other private banks around the world and will need to invest in suitable front and back office processes, as well as the using of data analytics to gain customer insights, to compete effectively."
What happens next?
The rest of the banks being investigated by the US will be forced to become more transparent and cooperate with the US, or take the fight to the regulators by challenging the investigation in court.
"If successful, it would provide the international community with welcome guidance on the power of the US to indict Swiss banks for activities committed on their own soil that, under Swiss law, are legal," said Brown.
"On the other hand, this would be costly, time-consuming, and may ultimately end in defeat. Assisting foreign governments (for instance, by handing over details of their clients) is most likely to be the easiest route to restoring faith in the Swiss banking system."
Morris too believes an element of cooperating and cutting deals will be the most likely way forward.
"Perhaps Wegelin has provided evidence against some other players, it is hard to tell currently, but no doubt all will become clear," he mused.
"What is evident is that the US is determined to pursue these cases as far as they need, and bring whatever pressure to bear, to stop future similar practice and to punish historical, deliberate collusion in tax evasion. They want to send a message to the tax havens of the world that they will eradicate such behaviour by US citizens and those who collude with them.
"Banks operating in all such regimes should start investing in appropriate monitoring and regulatory regimes to be prepared to engage with the national regulatory authorities of their international customers."
The Swiss government appears to want to play ball too, provided it's able to protect certain laws of its own.
Chief finance diplomat Michael Ambuehl was reportedly given a verbal pledge from the US Department of Justice to respect Swiss law when asking for bank client data of potential tax dodgers, according to Swiss newspaper NZZ am Sonntag.
The agreement has not been put in writing yet and could be withdrawn at any moment but sources told the paper on Sunday the US government's negotiators have made it clear they want to find a pragmatic solution to the long-lasting conflict.
It's not just in the US…
As Huff Post UK was writing this article, news arrived from Germany, where an accord that would have imposed new taxes on German clients in a bid to end a dispute over tax evasion was rejected.
Ernst & Young said in a statement that 72% of 120 Swiss banks it surveyed saw the demise of the agreement as positive as banks will avoid the costs of implementing the new deal, and the potential outflow of client assets as a result.
Meanwhile, in cash-strapped Greece, an increasing clamour is surrounding a list of 2,000 suspected tax refugees. Readers may remember the story of Greek journalist Costas Vaxemanis, who was charged with violating the privacy of the people on that list by publishing their names – he was eventually acquitted.
Now it seems Greek prosecutors will now look at the list, having initially shied away from it – officially because they were concerned that the list had been obtained illegally and they could therefore not use it in court.