Swiss bank accounts were long thought to be a safe place to hide illegal money, far from the reach of tax authorities, vigilance and financial regulatory authorities worldwide. Until UBS, the largest bank in Switzerland, agreed to reveal names of Americans whom authorities suspected of using offshore accounts to evade taxes.
The New York Times says
The bank admitted conspiring to defraud the Internal Revenue Service and agreed to pay $780 million to settle a sweeping federal investigation into its activities. It is unclear how many of its clients’ names UBS will divulge. Federal prosecutors have been examining about 19,000 accounts at the bank, but UBS ultimately may disclose the identities of only a few hundred customers. But to some, turning over any names at all heralds the end of the secret Swiss bank account, whose traditions date to the Middle Ages.
The Wall Street Journal comments
The agreement marks the first time Swiss financial regulators have allowed one of their banks to reveal the identity of account holders normally held secret under centuries of Swiss banking tradition. Some Swiss lawmakers have opposed the move, claiming it would destroy the Swiss banking industry. Even before the U.S. agreement, many of the world’s wealthy who have relied on Swiss banks have been spooked enough to move assets to other jurisdictions, according to lawyers and prosecutors.
Associated Press clarifies the issue further regarding banking secrecy and confidential Swiss Bank Accounts
Merz, UBS and Switzerland’s financial regulator all insist that Thursday’s handover is not a retreat from the principle of banking secrecy because it concerns only a small number of files that are linked to tax fraud — and not tax evasion.
Under a 75-year-old law, Swiss banking secrecy can only be lifted when individuals are deemed to have deliberately defrauded tax authorities as opposed to failing to declare all assets, a distinction only Switzerland and other tax havens make. Banking secrecy “serves to protect privacy,” Merz said. “However, it does not protect tax fraudsters.”
This will surely hit the Swiss banking industry which thrived on the very fact that hidden money could be easily, securely and secretly parked away into Swiss bank accounts and with no fear that regulatory or tax authorities from any country would be able to find the identities of these Swiss account holders. Now no Swiss bank is safe…