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Switzerland Yields To US Tax Demands

Monday, February 6, 2012

Following mounting pressure from the US attorney’s office, Switzerland has finally handed over to US investigators comprehensive, encrypted, banking data pertaining to eleven Swiss banks, alleged to have aided wealthy Americans to evade US taxes amounting to billions of euros.

The US has threatened legal proceedings against the banks and their executives, issuing them with an ultimatum back in December to hand over client data and to pay billions in fines to avoid prosecution. Credit Suisse, Julius Bär and the Cantonal Bank of Zurich are among the banks targeted.

According to a spokesman from the Swiss finance ministry, the data does not, however, include concrete client information, underscoring that full access to the information, including names of client advisors, will only be decoded and provided on a case-by-case basis, once an agreement has been reached between the US and Swiss authorities.

Switzerland is currently in the process of negotiating a tax agreement with the US to resolve the longstanding issue of US clients alleged to have undeclared accounts held in the Confederation. Talks recently stalled, however, as the US, which is said to be seeking a settlement sum of around USD10bn, has also demanded additional data together with a binding commitment and binding regulations to ensure that in future the Swiss authorities assist in pursuing suspected tax evaders.

Following a recent meeting in Davos with her US counterpart Timothy Geitner, Swiss Finance Minister Eveline Widmer-Schlumpf indicated, however, that a tax deal with the US to end the dispute might be possible later this year.

Switzerland’s oldest private bank Wegelin, the first to fall victim to the tax evasion rift and ensuing legal dispute, recently announced its decision to sell its operations in Switzerland. Wegelin employees were charged at the beginning of January with conspiring to conceal over USD1.2bn in undeclared client assets.