ZURICH: The unified front with which Switzerland's banks have defended their culture of secrecy is breaking down as some prepare to hand over data in a US tax evasion probe, leaving others at greater risk of prosecution.
The Swiss government is trying to push through a law that would allow banks to release the information on clients, helping 13 banks under formal investigation to avoid criminal prosecution including Credit Suisse and Julius Baer .
Although the move could deal a further blow to Switzerland's waning status as a discreet parking house for undeclared wealth, the government hopes it will head off more determined action by US prosecutors.
But some banks not named in the investigation, along with thousands of tax lawyers, custodians and small asset managers, fear the government is hammering out a deal that ignores their concerns and leaves them exposed to potential criminal lawsuits.
"This isn't a deal at all," said the Swiss Association of Asset Managers in a statement. "Swiss banks which have sinned are buying forgiveness by denouncing the independent asset managers, custodians, and lawyers they worked with in order to avoid being criminally prosecuted."
The investigation is focusing for now on the 13 Swiss banks suspected of abetting tax evasion by American citizens, but industry experts say as many as 80 financial institutions could face charges.
This would suggest an industry-wide response is needed to ensure smaller players do not collapse under onerous US fines or career-destroying criminal sentences.
At first the industry tactic was to strike individual deals with US authorities, beginning with private banking giant UBS , which agreed a landmark $780 million settlement in 2009 that involved handing over information that enabled American officials to pursue other Swiss institutions.
That became less tenable when the investigation took in a growing number of banks, including British bank HSBC's Swiss arm, privately held Pictet in Geneva and smaller players such as LLB's Swiss unit and local government-backed Zuercher Kantonalbank and Basler Kantonalbank.
"NO LEGAL CERTAINTY"
Swiss banks had found themselves barred by Swiss law from cooperating with US prosecutors and have been mostly pulling out of the US private client business.
Credit Suisse welcomed the new legal framework announced on Wednesday - the 13 banks hope it will end years of legal wrangling that has already driven one bank out of business.
They still face a share of fines that could total $10 billion, according to sources familiar with the talks. The bill caps two years of efforts by the Swiss government to resolve the tax dispute. It wants to push through the legislation in June for fear that US authorities could bring criminal charges against large banks and open new probes into many others.
But a risk of criminal sentences for people and institutions not covered by the pending settlement will remain. Switzerland has roughly 35,000 tax lawyers, financial custodians and other groups supporting a financial industry that generates 6 percent of the Alpine nation's gross domestic product.
"There is no legal certainty in any of this. Who is going to agree to something they know nothing about, except that it will cost an arm and a leg?," said one Zurich-based small asset manager on condition of anonymity.
The extent of Washington's resolve in pursuing cases beyond the banks themselves became clear last month when US authorities charged Edgar Paltzer, a Swiss attorney and partner with venerable Zurich law firm Niederer Kraft & Frey, with helping American clients hide millions of dollars in offshore accounts to avoid paying taxes.
indiatimes.com
The Swiss government is trying to push through a law that would allow banks to release the information on clients, helping 13 banks under formal investigation to avoid criminal prosecution including Credit Suisse and Julius Baer .
Although the move could deal a further blow to Switzerland's waning status as a discreet parking house for undeclared wealth, the government hopes it will head off more determined action by US prosecutors.
But some banks not named in the investigation, along with thousands of tax lawyers, custodians and small asset managers, fear the government is hammering out a deal that ignores their concerns and leaves them exposed to potential criminal lawsuits.
"This isn't a deal at all," said the Swiss Association of Asset Managers in a statement. "Swiss banks which have sinned are buying forgiveness by denouncing the independent asset managers, custodians, and lawyers they worked with in order to avoid being criminally prosecuted."
The investigation is focusing for now on the 13 Swiss banks suspected of abetting tax evasion by American citizens, but industry experts say as many as 80 financial institutions could face charges.
This would suggest an industry-wide response is needed to ensure smaller players do not collapse under onerous US fines or career-destroying criminal sentences.
At first the industry tactic was to strike individual deals with US authorities, beginning with private banking giant UBS , which agreed a landmark $780 million settlement in 2009 that involved handing over information that enabled American officials to pursue other Swiss institutions.
That became less tenable when the investigation took in a growing number of banks, including British bank HSBC's Swiss arm, privately held Pictet in Geneva and smaller players such as LLB's Swiss unit and local government-backed Zuercher Kantonalbank and Basler Kantonalbank.
"NO LEGAL CERTAINTY"
Swiss banks had found themselves barred by Swiss law from cooperating with US prosecutors and have been mostly pulling out of the US private client business.
Credit Suisse welcomed the new legal framework announced on Wednesday - the 13 banks hope it will end years of legal wrangling that has already driven one bank out of business.
They still face a share of fines that could total $10 billion, according to sources familiar with the talks. The bill caps two years of efforts by the Swiss government to resolve the tax dispute. It wants to push through the legislation in June for fear that US authorities could bring criminal charges against large banks and open new probes into many others.
But a risk of criminal sentences for people and institutions not covered by the pending settlement will remain. Switzerland has roughly 35,000 tax lawyers, financial custodians and other groups supporting a financial industry that generates 6 percent of the Alpine nation's gross domestic product.
"There is no legal certainty in any of this. Who is going to agree to something they know nothing about, except that it will cost an arm and a leg?," said one Zurich-based small asset manager on condition of anonymity.
The extent of Washington's resolve in pursuing cases beyond the banks themselves became clear last month when US authorities charged Edgar Paltzer, a Swiss attorney and partner with venerable Zurich law firm Niederer Kraft & Frey, with helping American clients hide millions of dollars in offshore accounts to avoid paying taxes.
indiatimes.com
No comments:
Post a Comment