The Swiss government’s plan to protect banks from US criminal charges is in the doldrums following a Swiss parliamentary committee’s rejection of the proposed bill on 11 June.
The rejection highlighed lawmakers’ divide over Swiss lenders disclosing data to US prosecutors to settle tax evasion probes.
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The upper house of Switzerland’s parliament will vote on the draft law, which aims to solve the issue without overturning Swiss banking secrecy laws on 12 June, followed by the lower chamber next week. The schedule is aimed at meeting a US ultimatum.
The proposed bill will not provide the names and account details of the Swiss banks’ clients but will allow the sharing of information on their behaviour.
Swiss banks suspected of helping wealthy Americans hide their money will have 120 days, if the draft law succeeds, to hand over the internal information to US authorities.
If the draft law does not succeed in both Swiss chambers of parliament, the Swiss government has warned the US could indict another bank, a move which is seen as the death knell for any business.
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By GlobalData
Stumbling blocks
On 29 May, the Swiss government agreed to create a legal basis that will enable its banks to settle investigations by US authorities into their role in assisting wealthy Americans in evading taxes. The deal could require many Swiss lenders to pay up to billions of dollars in fines to the US authorities.
The Swiss government has been urging the parliament to rush through the legislation this month to settle a long-running tax dispute with US authorities.
The Swiss finance department was quoted saying, "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."
However, the Swiss parliament halted the bill saying it needs to "know more" about what the deal entails.
The chairman of Credit Suisse, Urs Rohner, also warned that a long-running tax dispute over hidden Swiss bank accounts with the US could "easily escalate and spill over to rivals" if matters are not settled.
Blame galore
Several Swiss banks are being targeted directly by US authorities for assisting Americans evade taxes, following a US$780 million settlement with UBS in 2009.
At the end of 2012, the number of Swiss banks under investigation by the US Department of Justice (DoJ) increased to 13, including Credit Suisse, Geneva private bank Pictet and Bank Frey.
In January, Wegelin & Co, Switzerland’s oldest private bank, said it would shut its doors following a US indictment on charges of helping wealthy Americans evade taxes through secret accounts. Wegelin later pleaded guilty, admitted wrong-doing and paid US$58 million to US authorities.
More question marks
Switzerland’s long tradition of bank secrecy, which protects the identity of its clients, has led to the country becoming a haven for untaxed funds and the world’s biggest offshore centre, with US$2 trillion in assets. The long-running tax dispute between the Switzerland and the US is on its way to being settled.
However, European lawmakers are rattled in general to unpick data-sharing agreements with the US, reacting furiously to reports that US authorities have accessed emails and other personal data from leading internet companies. EU lawmakers are debating about whether or not its time to re-examine the deals regarding European financial data demands by US authorities, and limit access.
