US tax dodgers targeted as Swiss ease secrecy
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Thursday 30 May 2013
Switzerland has agreed to adopt new rules that would free its banks to reach settlements with the US authorities as they go after wealthy Americans suspected of using the European country's financial secrecy regime to evade taxes.
Following a meeting of the Swiss federal council, the government in Bern agreed to rush through legislation which would allow local lenders to share information with American authorities about employees involved in their US businesses, and relationships concerning US citizens.
More specific client data, including account information, would not be covered by the new law, the government said. The law would allow banks to strike deals with the US, which has been investigating a number of Swiss lenders. In 2009, the Americans made a major breakthrough, securing an agreement with UBS that saw the banking giant pay nearly $800m (£529m) in fines and share the names of more than 4,000 clients. That information is believed to have helped the US as it investigated other banks.
More recently, Switzerland's oldest bank, Wegelin & Co, which was established in the 1700s, said in January that it was closing after pleading guilty to helping wealthy American citizens evade taxes.
Faced with growing pressure from the US, the Swiss government has been attempting to find a way to settle the entire affair, while also safeguarding its financial industry, which is known worldwide for its secrecy.
Switzerland's finance minister, Eveline Widmer-Schlumpf, said the idea was to "restore stability" to the local banking industry.
"We are convinced it's a good, pragmatic solution that really helps the banks resolve this issue," she said, denying reports that the Swiss government might first pay billions of dollars in fines to the US to cover the expected liabilities of its banks, and then recoup the money from the lenders.
"I can tell you that Switzerland will pay nothing," Ms Widmer-Schlumpf added. Individual banks will themselves decide whether or not to negotiate with the US.
The Swiss government said yesterday it was going to rush through the new law because the US was "unprepared to wait any longer".
The new provisions would be "restricted to one year", giving banks enough time to strike deals and head off the possibility of potentially ruinous prosecutions.
"If banks were not authorised to cooperate with the US authorities, the initiation of further criminal investigations or charges concerning banking institutions could not be ruled out," the government said. "The uncertainty for the financial centre would continue to exist."
While the government did not put a figure on how much Swiss banks might pay in fines to end the US inquiries, recent speculation has thrown up a range of anywhere from $7bn to $10bn.
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