Renewed diplomatic spats over Switzerland's banking secrecy are a clear sign that the days of the alpine nation's highly lucrative, if shadowy, practice are numbered. Swiss officials and bankers should accept reality and overhaul the system.
The latest dispute involves revelations that a client data theft in 2006 and 2007 at HSBC's Swiss private bank involved 24,000 accounts, far more than was initially acknowledged. The suspect, a former information technology worker named Herve Falciani, ended up in the custody of the French authorities, who made copies of the stolen information before returning it to their irate Swiss counterparts. The French say they reserve the right to use the data to track down French tax dodgers.
Cash-strapped governments across Europe and in the US are ready to use all methods fair or dubious to gain banking information to go after tax evaders among their own citizens. The French case echoes recent controversial incidents with the US and German governments, which have shown willingness to pay for stolen information of secret Swiss accounts. These fights, which often see potential criminals being rewarded for their crimes, are becoming increasingly frequent and acrimonious. But it would be absurd to consider Switzerland the victim of bullying by other governments.
To be sure, there has always been an element of hypocrisy in the way governments of rich nations have tolerated the existence of tax havens like Switzerland for decades. Rich and powerful people have made use of such services and their friends in governments do not want to stand in their way. Meanwhile, dictators and corrupt officials of poor and developing nations have long been among Switzerland's most loyal customers. The Swiss therefore indirectly aid and abet the impoverishment of many poor countries.
Last year, the G20 group of leading economies forced the Swiss to water down secrecy laws and regulations but it did not go far enough. The bottom line is that the world should not tolerate special treatment for rich tax cheats.
