The governing Federal Council said in a statement that banks wishing to hand over information would be able to seek authorization from the Swiss government on an individual basis, “within the scope of existing law and particularly data protection and employment law provisions.”
The central government’s plan is needed to address the vacuum left after Parliament adjourned for the summer without having approved an information-sharing agreement with the United States. The lower house of Parliament refused to hear that proposal last month, effectively killing it, but both houses called on the government to “take every measure within the scope of existing law to enable the banks to cooperate with the Department of Justice.”
Some sort of Swiss government approval is essential for any sharing of information, because it is a crime under Swiss law to transfer bank data to foreign authorities. But the announcement Wednesday was notable for its lack of detail, suggesting that the government had not yet come up with a way to satisfy both sides of the dispute.
As with the failed parliamentary measure, the Federal Council’s proposal does not provide for any transfer of individual client data, something that is handled through requests from one government to another. Banks could, however, seek permission to turn over information on employees who had dealt with American tax evaders, as well as information about how tax dodges that targeted American clients actually worked. The Federal Council acts as the head of state.
The Swiss Bankers Association said that it “welcomes” the Federal Council’s announcement, and it “expects that this will finally create legal certainty so that the banks in Switzerland can make use of the U.S.’s unilateral program.” It remained to be seen, however, whether the move would meet with approval in Washington. The Justice Department did not immediately respond to requests for comment.
Switzerland has been in the sights of the Justice Department since 2009, when UBS, the largest Swiss bank, paid a $780 million fine and agreed to hand over 4,450 client names to settle accusations that it had helped wealthy Americans hide assets overseas. Another Swiss bank, Wegelin Company, has been driven out of business after an American indictment. The country is also under pressure from the European Union, of which it is not a member, to become more transparent.
About a dozen Swiss banks are facing criminal investigations in the United States on suspicion of helping Americans dodge taxes, and hundreds more have similar problems that may have to be addressed.
The banks facing prosecution “are reliant on the authorizations” being approved, the Federal Council said in its statement Wednesday. It said talks were being held with the Justice Department about banks that were not yet in Washington’s sights. Those banks would also need authorization from the government to hand over any data, it said.
Switzerland has little choice but to reach an agreement, given Washington’s role in the international financial system and the banks’ need for access to American financial markets. The Swiss banks are nonetheless fighting to keep intact as much of their client secrecy as possible, hoping that a single deal with the United States will not serve as a template for future agreements.
Article source: http://www.nytimes.com/2013/07/04/business/global/swiss-proposal-aims-to-defuse-tax-dispute.html?partner=rss&emc=rss
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