Switzerland Acts to Further Discourage Violation of Its Bank Secrecy Laws
Switzerland is one of several jurisdictions worldwide, along with Luxembourg and Lebanon, where bank secrecy laws are held in higher regard than the need for transparency in financial and, consequently, tax reporting.
In general, bank secrecy – not to be confused with the U.S. Bank Secrecy Act of 1970 – is a legal principal pursuant to which banks in adopting jurisdictions are prohibited from providing authorities with personal and account information of their account holders, except in certain circumstances.
Bank secrecy, which originated from the Swiss Banking Act of 1934, has been, and continues to be, a sensitive and controversial topic as it is thought to facilitate, if not encourage, money laundering and tax evasion (amongst other socioeconomic ills) as evidenced in part by the Clearstream scandal in early 2000, and, more recently, the conviction of former Julius Bär employee, Rudolf Elmer, for violating bank secrecy laws.
Recently, Swiss authorities enacted laws which prescribe stiffer penalties against whistleblowers and others violating its bank secrecy laws. Such new laws subject those profiting from violating bank secrecy laws to a prison sentence of up to five years. Non-bank employees convicted of using information otherwise protected under Swiss bank secrecy laws are also subject to such newly enacted laws.
Stateside, it is worth noting that some Swiss banks, Credit Suisse and UBS amongst the lot, are or were under investigation by the US Justice Department for their alleged roles in helping account holders avoid US taxes. And, as recently as 2014, Credit Suisse pleaded guilty to aiding tax evasion and agreed to a fine of $2.6 billion.
As national authorities act to curb tax evasion and discourage money laundering, while other parties with less compatible interests pursue alternatives to minimize or circumvent financial reporting regulations, it is likely the issue of bank secrecy has not yet written its final chapter.
If you have any questions, please contact a WithumSmith+Brown professional, a member of our International Services Group or email us at [email protected].
Therwin Young
609.520.1188
[email protected]
To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
