Friday 22 June 2018

Swiss banks allowed to settle US tax cases

Zurich, May 29, 2013

Switzerland aims to save its banks from heavier punishment in the US for helping wealthy tax cheats by sidestepping its own famed secrecy laws to let bankers disclose data to US prosecutors.
A government bill put to parliament on Wednesday would let Swiss banks hand over internal information to US authorities in the hope of avoiding threatened criminal charges - though the banks still face fines likely to total billions of dollars.
Bankers welcomed the prospect of an exit from years of legal wrangling that has already cost them dear and driven one bank out of business but were disappointed ministers failed to win more clarity from Washington on what settlements they might now expect. Opposition in parliament could yet block the measure.
Five months after US action over tax evasion led to the closure of the country's oldest private bank, and with formal investigations under way into some of its biggest institutions, the Swiss government urgently wants a compromise to end threats of criminal charges that have hurt a vital national industry.
It insists banks will still not be allowed to hand over client names - protected by its treasured secrecy law of 1934.
But the new proposal, valid for a year only, would allow them to hand over so much information on customers' behaviour that US officials should be able to identify Americans who have used Swiss bank accounts to evade their taxes.
"If banks were not authorised to cooperate with the US authorities, the initiation of further criminal investigations or charges concerning banking institutions could not be ruled out," the Swiss finance department said in a statement.
Swiss analysts were divided: some called it a sensible way out of a problem that meant banks, which are mostly now pulling out of the US private client business, found themselves barred by Swiss law from cooperating with US prosecutors; others condemned the blow to secrecy as "blackmail" by Washington.
The country's biggest bank UBS was forced in 2009 to pay a fine of $780 million and deliver the names of more than 4,000 clients to avoid indictment, giving the US authorities information that allowed them to then pursue other Swiss banks.
Switzerland's tradition of bank secrecy has helped make it the world's biggest offshore financial centre, with $2 trillion in assets. But that tradition has come under heavy fire since the financial crisis as cash-strapped governments around the world have clamped down on tax evasion, with authorities probing Swiss banks in Germany and France as well as the US.
Banks under formal US investigation include Credit Suisse , Julius Baer, British bank HSBC's Swiss arm, privately held Pictet in Geneva and smaller players such as LLB's Swiss arm and local government-backed Zuercher Kantonalbank and Basler Kantonalbank.
A Credit Suisse spokesman welcomed the legal framework, but declined to comment on when it might reach a settlement with U.S. authorities. - Reuters

Tags: US | Swiss banks | tax evasion |


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