Resources

Swiss bank account holders lose right to be warned of foreign requests

Monday, 10 March, 2014

The Swiss parliament has voted to allow accountholders' information to be disclosed to foreign tax authorities without giving the accountholder advance notice.

The amendment to banking secrecy law was proposed by the Federal Council last August under the threat of OECD sanctions. After a very short public consultation, it was introduced into parliament as a revision of the Tax Administrative Assistance Act.

The previous Swiss practice was to give the accountholder prior notice of the disclosure, but this did not comply with OECD Global Forum demands. Under the revised act, affected taxpayers will only be notified after the information has been disclosed to the requesting state's authorities.

The procedure will, however, be restricted to cases whereby the requesting government can show that a prior notification to the suspect would compromise its investigation.

Last summer's consultation did, however, lead the Federal Council to change its mind about the use of client information stolen from Swiss banks. It had proposed allowing foreign governments to use such information to support their requests for Swiss help in tax investigations. This has now been dropped after criticism that it would encourage criminal acts.

The official Swiss position thus remains that treaty administrative assistance requests based on unlawfully obtained information will be ignored. Many foreign investigations are reliant on such data, for example the French government's use of a computer disk containing stolen records of 24,000 HSBC Geneva clients, and a similar disk bought by the government of the German state of Rhineland-Palatinate.

Switzerland is now hoping that this partial acquiescence to the OECD's demands will be enough for it to pass the second phase of the Global Forum's peer review process. If not, it will again be at risk of sanctions.

Sources