Swiss banks break ranks as US tax probe bites
The unified front with which Switzerland’s banks have defended their culture of secrecy is breaking down as some prepare to hand over data in a US tax evasion probe, leaving others at greater risk of prosecution. The Swiss Government is trying to push...
The unified front with which Switzerland’s banks have defended their culture of secrecy is breaking down as some prepare to hand over data in a US tax evasion probe, leaving others at greater risk of prosecution.
The Swiss Government is trying to push through a law that would allow banks to release the information on clients, helping 13 banks under formal investigation to avoid criminal prosecution including Credit Suisse and Julius Baer.
Although the move could deal a further blow to Switzerland’s waning status as a discreet parking house for undeclared wealth, the government hopes it will head off more determined action by US prosecutors. But some banks not named in the investigation, along with thousands of tax lawyers, custodians and small asset managers, fear the government is hammering out a deal that ignores their concerns and leaves them exposed to criminal lawsuits.
“This isn’t a deal at all,” said the Swiss Association of Asset Managers in a statement. “Swiss banks which have sinned are buying forgiveness by denouncing the independent asset managers, custodians and lawyers they worked with in order to avoid being criminally prosecuted”.
The investigation is focusing for now on the 13 Swiss banks suspected of abetting tax evasion by American citizens, but industry experts say as many as 80 financial institutions could face charges.
This would suggest an industry-wide response is needed to ensure smaller players do not collapse under onerous US fines or career-destroying criminal sentences.
At first the industry tactic was to strike individual deals with US authorities, beginning with private banking giant UBS, which agreed a landmark $780 million settlement in 2009 that involved handing over information that enabled American officials to pursue other Swiss institutions.
That became less tenable when the investigation took in a growing number of banks, including British bank HSBC’s Swiss arm, privately held Pictet in Geneva and smaller players such as LLB’s Swiss unit and local government-backed Zuercher Kantonalbank and Basler Kantonalbank. Credit Suisse welcomed the new legal framework announced – the 13 banks hope it will end years of legal wrangling that has already driven one bank out of business.