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Swiss banks hand over encrypted data

Zurich, January 31, 2012

Switzerland has handed US authorities encrypted data on bank employees who served American clients suspected of dodging taxes, and will only provide the key to decipher them once a tax row is settled, the finance ministry said.

Swiss banks have provided tens of thousands of pages of encrypted data on their US businesses, including names of client advisers, a finance ministry spokesman said.

The data transfer came after Swiss media reported the US authorities had set a January 30 deadline for banks under investigation -- including Credit Suisse, Julius Baer  and Basler Kantonalbank -- to deliver data on their US offshore business or face possible prosecution.

"We will only decode when we have found a solution with the United States on all the banks that are under discussion," finance minister Eveline Widmer-Schlumpf told Swiss television.

Switzerland is trying to get US investigations into 11 banks dropped in return for the payment of hefty fines and the transfer of names of US clients suspected of dodging taxes but is also trying to defend its tradition of strict bank secrecy.

The urgency of reaching a deal was shown last week when Wegelin, Switzerland's oldest bank, broke itself up due to the pressure of the US investigation after three employees were indicted for selling tax evasion services to rich Americans.

Widmer-Schlumpf, who discussed the dispute in Davos last week with US Treasury Secretary Timothy Geithner, has said it is important to prevent other banks getting into the same situation as Wegelin and hopes to reach a deal in coming months.

Martin Naville, the head of the Swiss-American Chamber of Commerce, said the delivery of encrypted data was an attempt by the Swiss government to show willing in the talks. "We are in a process of negotiations, not at war. In negotiations, you have to give something from time to time," he told Swiss television.

The finance ministry said it could only transfer non-encrypted bank data in individual cases when the US authorities had made a request under existing double taxation treaties and when the person accused had also broken Swiss law.

Swiss banking secrecy has been under global attack in recent years as cash-strapped governments seek to crack down on tax evaders. UBS paid $780 million to settle US tax charges in 2009 and also turned over the names of 4,500 clients. - Reuters




Tags: US | data | Swiss banks | secrecy |

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