The Treasury Department announced on Thursday that the United States and Switzerland have signed a bilateral agreement to implement provisions of the Foreign Account Tax Compliance Act (FATCA).

FATCA was enacted by Congress in 2010 as part of the Hiring Incentives to Restore Employment Act of 2010, P.L. 111-147. It requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by U.S. taxpayers or by foreign entities in which U.S. taxpayers hold a substantial interest.

The U.S.-Switzerland agreement requires Switzerland to direct all reporting Swiss financial institutions to register with the IRS by Jan. 1, 2014, and comply with FATCA due-diligence, reporting, and withholding requirements. Switzerland also agrees to instruct reporting Swiss financial institutions to request certain information from preexisting account holders and report it to the IRS and to obtain consent from new account holders to report this information as a condition of opening the account.