Stolen data can now be used to back Swiss bank disclosure demands

Thursday, 15 August 2013
Switzerland has at last conceded that foreign governments can use stolen client information to support their requests for Swiss help in tax investigations.

The Swiss government’s long-held position is that it will not consider treaty administrative assistance requests if they are based on unlawfully obtained information. The most famous example is the computer disk containing records of 24,000 HSBC Geneva clients, stolen from the bank by one of its IT staff in 2007. This data was subsequently acquired by the French government, who passed selected records to the tax authorities of numerous other countries, resulting in many prosecutions. The Swiss are still hoping to extradite the suspected data thief, Herve Falciani.

There have been several other such leaks by ‘whistleblowers’. For example, in April this year, the government of the German state of Rhineland-Palatinate bought a disc containing 40,000 records of foreign bank accounts operated by German residents, many of them clients of Swiss banks. Requests to Swiss banks about these clients were, however, declined.

But increasing international pressure has forced Switzerland to accept this practice – though it will still try to impose conditions. ‘In order to resolve the impasse, it is to be possible for future requests to be processed, provided that the requesting state acquired the data passively, e.g. via another state, and not actively’, said the Swiss Federal Council, announcing a revision of the Tax Administrative Assistance Act. ‘Requests that are contrary to the principle of good faith will not be considered’.

The Act is also to be amended to allow bank account information to be disclosed to foreign governments without warning the accountholder. The previous Swiss practice was to give the accountholder prior notice of the disclosure, but this did not comply with OECD Global Forum recommendations. Under the revised Act, affected taxpayers will only be notified after the information has been disclosed to the requesting state’s authorities. This procedure will, however, be restricted to ‘urgent cases’, such as when prior notification would compromise the investigation, said the Swiss government.

The amendments are the subject of an unusually short consultation that ends on 18 September. The tight deadline is necessary, says the government, because the July meeting of G20 finance ministers urged all jurisdictions to address the OECD Global Forum’s recommendations ‘without further delay’.

‘As final grading after completion of phases 1 and 2 of the peer review will commence in October 2013, Switzerland has a significant interest in being able to announce the revision of the Tax Administrative Assistance Act internationally as soon as possible and then put it into force’, said the government statement. The implication is that the G20 ministers threatened Switzerland with blacklisting unless these measures were rushed through.


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