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Swiss battle for bank secrecy in US courts
By Lisa Jucca |
July 9, 2009, Thursday
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Print Edition
Print Edition
SWITZERLAND has vowed to prevent UBS from handing over client information to United States authorities, in an attempt to defend bank secrecy, saying a tax case targeting its main bank is souring diplomatic ties.
Wealth management giant UBS is facing a court hearing in Miami next week after refusing to disclose data on 52,000 Americans holders of secret Swiss bank accounts to US tax authorities.
The Swiss Justice Ministry said yesterday that Swiss law prevents UBS from handing over client information and the government would seize UBS client data, if necessary, to stop that happening.
The case, which comes amid a global fight supported by the US administration against tax cheats, has damaged the UBS brand and could result in an expensive settlement for the bank at a time when the bank needs to focus on restructuring.
"Switzerland will use its legal authority to ensure that the bank cannot be pressured to transmit the information illegally, including if necessary by issuing an order taking effective control of the data at UBS," the Swiss government said in a response to US authorities filed in Miami on Tuesday.
The tax litigation is also crucial for the future of the multi-billion dollar wealth management industry and is pushing several offshore banks to force clients to come clean.
A court hearing that will lead to a ruling on the UBS data issue is due to start next Monday.
Washington has accused UBS of hiding nearly US$15 billion in assets in secret accounts.
Full weight
The Swiss statement came in response to a filing by the US Justice Department last week asking the Miami court to enforce tax compliance with the full weight of US law.
Although Swiss criminal law prohibits banks passing on client information to foreign authorities, UBS and Switzerland have already made concessions on their treasured bank secrecy.
UBS agreed to pay US$780 million in February, admitted wrongdoing and disclosed about 250 client names to avert tax fraud criminal charges the Swiss government said threatened the bank's survival.
Switzerland vowed in March to redraft its tax treaties with the US.
Wealth management giant UBS is facing a court hearing in Miami next week after refusing to disclose data on 52,000 Americans holders of secret Swiss bank accounts to US tax authorities.
The Swiss Justice Ministry said yesterday that Swiss law prevents UBS from handing over client information and the government would seize UBS client data, if necessary, to stop that happening.
The case, which comes amid a global fight supported by the US administration against tax cheats, has damaged the UBS brand and could result in an expensive settlement for the bank at a time when the bank needs to focus on restructuring.
"Switzerland will use its legal authority to ensure that the bank cannot be pressured to transmit the information illegally, including if necessary by issuing an order taking effective control of the data at UBS," the Swiss government said in a response to US authorities filed in Miami on Tuesday.
The tax litigation is also crucial for the future of the multi-billion dollar wealth management industry and is pushing several offshore banks to force clients to come clean.
A court hearing that will lead to a ruling on the UBS data issue is due to start next Monday.
Washington has accused UBS of hiding nearly US$15 billion in assets in secret accounts.
Full weight
The Swiss statement came in response to a filing by the US Justice Department last week asking the Miami court to enforce tax compliance with the full weight of US law.
Although Swiss criminal law prohibits banks passing on client information to foreign authorities, UBS and Switzerland have already made concessions on their treasured bank secrecy.
UBS agreed to pay US$780 million in February, admitted wrongdoing and disclosed about 250 client names to avert tax fraud criminal charges the Swiss government said threatened the bank's survival.
Switzerland vowed in March to redraft its tax treaties with the US.
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