Switzerland to loosen bank secrecy laws under US pressure

The Swiss government will allow its banks to reveal some customer information to US authorities that they were barred from revealing so far, an important step in settling tax disputes between the nations.

US authorities have been mounting pressure on the Swiss for information on Americans who use Swiss bank accounts to dodge taxes. According to the Swiss Federal Council, the executive branch of the Swiss government, the new rules were important for the country's banks to resolve the tax cases.

"If banks were not authorised to cooperate with the US authorities, the initiation of further criminal investigations or charges concerning banking institutions could not be ruled out. The uncertainty for the financial center would continue to exist," said the statement from the Federal Council. It added it issued the new rules, which would go before the Swiss parliament, as the US authorities were no longer willing to wait before taking action against Swiss banks.

Switzerland's bank secrecy regime has seen the country emerge as a respectable tax haven for wealthy individuals from around the globe. However, the secrecy had already been pierced in some recent settlements between some of its leading banks and US tax authorities (See: Swiss parliament approve US-UBS client data transfer deal).

In 2009 UBS (UBS), the biggest bank in the country agreed to turn over the records of thousands of US customers who were under suspicion of having used  their accounts to evade taxes (See: US breaches Switzerland's banking citadel; UBS to reveal 4,450 names).

The  proposed bill would authorise Swiss banks to cooperate with US authorities and transfer information while safeguarding their interests, the government said in a statement today. The Swiss parliament would consider the bill as early as next week and it could come into force on 1 July.

''The sense of urgency is because preparations were being made for more banks to be made responsible,'' Swiss finance minister Eveline Widmer-Schlumpf told reporters in Bern.

Switzerland has been in talks with the US over two years to resolve a justice department investigation involving at least 14 financial firms that allegedly helped Americans hide money from the Internal Revenue Service.

According to analysts, the Swiss government wanted to prevent indication of another bank after Wegelin & Co pleaded guilty in a Manhattan federal court in January to conspiring to help hide over $1.2 billion from the IRS.

The Swiss government said, the bill would allow banks to share information on employees and third parties who worked with American clients.