Switzerland frees banks to settle US tax evasion cases

Switzerland aims to save its banks from heavier punishment in the United States 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.