Switzerland proposes a bill that would lay legal basis for the country’s banks to resolve tax evasion disputes with the U.S.
According to a Reuters report, the Swiss finance department indicated that the government was proposing a legislation to be rushed through parliament in the summer session in June.
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The government-brokered settlement has reportedly been reached. However, the Swiss government has to ensure that the deal doesn’t jeopardize the country’s reputation of keeping bank secrecy.
Switzerland To Build A $2 Trillion Offshore Financial Industry:
The bank secrecy tradition has facilitated Switzerland to build a $2 trillion offshore financial industry.
The proposal is expected to involve the Alpine nation to disclose bank client names besides shelling out an estimated $7 billion as a fine to the United States.
The Swiss government ordered on Tuesday its third largest private bank, Julius Baer, to hand over its data on U.S. clients. Julius Baer group had assets under management of 220 billion Swiss Frances ($207.7 million) by the end of April 2013, an increase of 16 percent from its December 2012 figure.
Switzerland’s Tighter Regulations:
Interestingly, despite Switzerland’s tighter regulations, the country is expected to attract heavy inflows during this year, after experiencing a dry spell last year.
About a dozen Swiss banks have reportedly been targets of U.S. investigators. The list includes the Alpine nation’s Credit Suisse Group AG (NYSE:CS), the Zurich-based Julius Baer Gruppe AG (VTX:BAER), and two cantonal or regional banks besides the Swiss operations of HSBC Holdings plc (NYSE:HBC) (LON:HSBA).
Last year, the Justice Department indicted Switzerland’s oldest private bank, Wegelin & Co, for allegedly helping prosperous Americans hide over $1.2 billion from the Inland Revenue Service through secret accounts. During January this year, Alpine’s 250-year old private bank announced it would close down for good.
The U.S. authorities’ biggest success came in 2009, after Switzerland’s largest bank UBS AG (NYSE:UBS), agreed to provide over 4,450 client names. UBS also paid a $780 million fine after admitting it was selling tax-evasion services to wealthy Americans.
The proposed bill will enable Swiss banks to pass on information on business relationships concerning U.S. persons and details on employees who worked with Americans. However, the proposal doesn’t envisage transfer of client data, which have to conform to administrative assistance procedures.
Interestingly, whistle blowers have played a critical part during the investigation. Last year, the Internal Revenue Service indicated that it would pay the former UBS banker, Bradely Birkenfeld, over $104 million, for extending co-operation to unearth secrets of Swiss Banking System.