Swiss Banking Secrecy

Switzerland seeks law change to hand details of UBS 'tax evaders' to United States
Times Online, April 1, 2010
Switzerland will seek to override its courts in order to hand over over the names of thousands of suspected tax evaders to the US.
The Swiss Federal Council, the government's Cabinet, wants the parliament to approve its decision so that it can give the names of 4,450 UBS customers to the US Internal Revenue Service.
The agency believes that the customers placed money offshore in order to avoid paying tax in the United States.
The council warned today: "Should Switzerland fail to fulfil its obligations under international law, there would be a risk that the legal and sovereignty conflict with the USA - with its detrimental impact on Switzerland's financial centre and economy - would flare up again."
If the handover is not completed by August 19 then UBS, Switzerland's biggest bank, will face prosecution in the US for assisting tax evaders.
The Swiss Government said that it would continue to process the information on UBS clients so that the handover could be completed quickly if parliament supported the legal change.
Tax evasion is not a crime under Swiss law, unlike tax fraud. The country's banking secrecy laws allow it to provide information to other countries only in criminal cases.
The US, though, considers both evasion and fraud to be crimes.
The Swiss Federal Council said today that it wanted to co-operate with other countries not only in tax fraud cases but also in cases of "serious and continued tax evasion".
UBS avoided prosecution in the US last February by agreeing to pay a $780 million settlement over claims that the bank helped thousands of Americans to put money into Swiss bank accounts in order to avoid US tax.
The IRS then threatened to also prosecute the bank if it did not provide the names of clients who used its offshore services.
Switzerland promised last August that UBS would give 4,450 names of those thought to be the biggest tax evaders to its Government, which would then undertake the handover.
In January, however, a Swiss court found in favour of a UBS client who argued that her failure to tell the IRS of her Swiss bank account did not constitute fraud, so her details could not be handed to the US.
The finding applied to almost all of the 4,450 people at risk of being exposed to the IRS.
The SVP, Switzerland's biggest party, which has said that it does not approve of the legal change.

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