• Fri
  • Jul 11, 2014
  • Updated: 7:39pm
NewsWorld
Tax

Swiss banks may face charges as deal blocked

Data-sharing agreement would have ended tax-evasion dispute with US

PUBLISHED : Friday, 21 June, 2013, 12:00am
UPDATED : Thursday, 20 June, 2013, 11:20pm

Switzerland's Parliament has scuttled an information-sharing agreement with the US that the Swiss government had hailed just weeks ago as a breakthrough in a dispute over banking secrecy.

The Swiss government said in late May that it would let banks hand over data on US clients' hidden accounts without violating the country's bank secrecy laws.

The move was meant to help Swiss banks head off the possibility of criminal prosecution for helping Americans evade paying taxes.

But the proposal proved contentious in a country that has long prided itself on the discretion of its bankers, and it failed to gain the necessary support.

Some members of Parliament on Wednesday raised concerns about the precedent that any such agreement might set at a time when Switzerland's banking secrecy is also under attack from the European Union - of which the country is not a member.

They also complained that the terms were not fully revealed and that the Swiss federal authorities were pushing Parliament to pass the deal by yesterday, to go into effect July 1.

The Parliament, however, did signal its willingness to find an alternative.

Eveline Widmer-Schlumpf, the Swiss finance minister and president of the governing Federal Council, said in a statement that the government "will do all it can within the scope of its legal powers to allow the banks to resolve the tax dispute".

Swiss news service Agence Télégraphique Suisse said Widmer-Schlumpf had urged Parliament to let banks take the US up on its offer. "Washington knows no forgiveness," she told legislators.

The Swiss have been working to assuage officials in Washington since 2009, when UBS settled with federal authorities in a tax evasion case.

UBS, the largest Swiss bank, paid a US$780 million fine and agreed to hand over 4,450 client names to resolve accusations that it helped wealthy clients avoid taxes.

The Justice Department has since begun investigations into a dozen Swiss banks. One of the banks which was indicted, Wegelin & Co., ceased operations.

The failure of the bill on Wednesday could prompt Washington to take new action against Swiss lenders.

The Swiss Banking Association said in a statement that it "regretfully takes note" of Parliament's decision, saying that such a law would have been the best means for helping banks "make use of the US's programme in order to draw a line under the past."

The consequences of the rejection "are incalculable," the banking association said.

The US Justice Department declined to comment.

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