Switzerland will be saving its banks from the United States by allowing Swiss banks to give information to U.S prosecutors via a bill ran through parliament earlier today. This means it will be doing away with its own vastly desired—by tax dodgers—bank laws which keep prosecutors from gaining access to financial data…but only for a year. While Swiss banks are still looking at billions of dollars in fines, this does soften the blow in the future as there will be times when the U.S will want to hunt tax cheats and their overseas accounts.
The reception from bankers has largely been positive toward the bill. After all, it keeps out of future instants of that legal mess of adhering to other countries’ laws, going through with Switzerland’s laws, and catering to very wealthy clients. All of this legal jousting led to Switzerland’s oldest private bank being shuttered. The bill isn’t a guarantee as some in parliament could run it into the ground and simply have the banks take their chances with U.S law.
While it could be expected that this would lead to some wealthy customers taking their ducats elsewhere, it’s expected that the Swiss banks probably wouldn’t be allowed to simply hand over information without doing something about its long standing—and cherished, obviously—1934 secrecy law. Remember it’s only for a year, so if the bill get the thumbs up in parliament, the U.S would need to scramble to get whatever names it can. By then however, money could be moved around.
In a statement, the Swiss finance department said of the measure, “If banks were not authorized to cooperate with the U.S. authorities, the initiation of further criminal investigations or charges concerning banking institutions could not be ruled out.”
The kind of trouble Switzerland is looking to avoid is best defined by the 2009 fine levied against their biggest bank in UBS. The U.S threw a $780 million fine at the bank which resulted in it handing over 4,000 clients. The worst case scenario would be what happened to the oldest private bank Wegelin & Co in January when it closed its doors after being fined almost $58 million and pleaded guilty to shady tax business. It wouldn’t be surprising that whatever wealthy clients were left bailed from UBS shortly afterwards. Some Swiss financial experts call this a good measure to avoid another UBS while others consider it bully tactics.
The rogue’s gallery of banks being looked at by the U.S—as well as Germany and France—include Julius Baer, HSBC’s Switzerland based holdings, Pictet, and others. Finance Minister Eveline Widmer-Schlumpf said that the U.S Department of Justice would offer settlements with banks once parliament structured the bill. The Finance Minister stated that if the U.S Senate wanted more names, it would have to ratify a double-taxation agreement that Switzerland agreed to in 2009.