Tuesday, September 13, 2011

The Noose Tightens: Swiss Banks Deliver Up Data (9/11/11)

Ten of the more significant Swiss bank players in assisting U.S. taxpayers hide their income from U.S. tax authorities have delivered statistical data to the U.S. The data is sufficiently broad that it does not identify individual taxpayers but almost certainly could give the U.S. ways to sharpen its focus on the information and documents that it might ultimately demand from the banks.

An article in Tax Notes (Randall Jackson, Swiss Banks Turn Over Statistical Data in Tax Evasion Investigation, 2011 TNT 177-3 (9/13/11)) reports:
The banks include the following:
Julius Baer
Basler Kantonalbank
Zürcher Kantonalbank
Eveline Widmer-Schlumpf, chief of the Swiss Federal Department of Finance, on September 10 also stated that statistical data had been turned over to U.S. officials. However, she added that no personal data had been disclosed. "That would be a violation of banking secrecy," she said, as quoted in a September 11 Agence France-Presse report.
Widmer-Schlumpf stressed that reaching a mutually acceptable outcome between the United States and Switzerland over the latest tax argument is of vital importance, but that it would not require an emergency law or separate treaty.
"The fact is that we are working with a lot of commitment for a solution that Switzerland can deliver within the existing legal framework of administrative assistance in the case of tax fraud and tax evasion. This is happening in accordance with the government and in conjunction with the involved banks. There is no need for an emergency law or separate treaty," she said, as quoted in a September 11 interview with NZZ am Sonntag.
Katie Reid, U.S. Obtains Data From 10 Swiss Banks In Tax-Dodging Probe (Huffington Post/Reuters 9/10/11), here.

Breaking News 9/13/11:

As the commenter notes below, the reports are that the Swiss are caving for all banks by now allowing what I call John Doe Treaty requests as follows (US client data to be provided based on activity (swissinfo.ch), here):
In cases where US authorities are able to supply enough details to justify a suspicious pattern of behaviour, Swiss banks will hand over the names and account details of US clients suspected of tax fraud – which happened to 4,500 UBS clients in 2009.
Of course, the U.S. will only be able to supply very general characteristics, such as use of foreign entities between the swiss account and the U.S. taxpayer, failure to supply the required forms, perhaps some minimum dollar amount (say $50,000).  Many of the characteristics might be discernible from the aggregate data discussed above, and were a key component of the UBS requests.

I will post more on this as more details are known.


  1. Jack,

    It seems strange that Credit Suisse is not in the mix? Could the others be selling out CS? Has the pirates' equilibrium been compromised?


  2. Hot off the press for whatever it may or may not mean.


  3. The Lost Key

    (Sufi Stories)

    Mulla Nasruddin was searching for something in his garden. When his neighbour asked him what he was searching, he replied that he was looking for his house key.

    Wanting to help him, his neighbour joined him asking : ''Do you remember where you dropped it?''

    Mulla answered: 'Of course I do, in my house.'

    'Why are you looking here?', asked his neighbour confused.

    Mulla Nasrudin replied: 'Because there is much more light here than in my house.'

  4. To Anonymous,

    First thank you,

    Second, what in God's green earth does this piece of fine literature mean?


  5. Regarding looking where there is most light rather than where you lost the item.

    I was just thinking about how the US is looking in Switzerland, where they receive the most answers and where there is a State dept liaison just for the DOJ/IRS.

    Maybe they are looking there because they receive the most cooperation. The IRS/DOJ are human too, and they appreciate a little warmth.

    In the West Indies/Bermuda it's probably unfriendly towards them so they don't bother looking.

    But maybe that is where they should be looking.

    From my reading of offshore "digests", the offshore community has written off the Swiss in 2009 when they released the names. So what the Swiss have left may not be quite what the US is looking for. Ie. the most egregious offenders have already set sail for safer hideouts.

    It's just a paradigm.

    The name of the movie was "Pirates of the Caribbean", not "Pirates of the Alps". The Swiss are fighting mostly a Constitutional battle, their Constitution against the US's.

    Real pirates don't bother with Constitutions, or diplomacy.

    Bermuda/Cayman are recruiting any CPAs/Chartered Accountants they can get, to join their pirate ships as financial experts, for short stints (up to 2 years) of crewing.

    They advertise that they pay in tax free cash, for the adventurous types who want to leave civilization behind (for a short while anyway).

  6. M... Good insights. Thanks, and I loved your Sufi story, as did my wife. Took her a little longer to get it! :) Enjoy your posts.

  7. A public confession from Basler Kantonal Bank. My, My this is gonna be ugly.


  8. I'm amazed. The chairman of Basler Kantonal Bank essentially admitting that the bank willfully broke US law. Either he's very confident that the Swiss government will back him or (more likely), a deal is in the works.

  9. Swiss cheese has a lot of holes in it. According to the below article, Swiss Banking does too. It sounds like the Swiss may be blocking client access to their accounts while they negotiate with foreign tax authorities about some sort of tax settlement. What a classy bunch of backstabbers!


  10. Deal goes to Parliament with objection likely according to Reuters.


  11. If the below report is accurate, the Swiss will turn over a first batch U.S. client details at the end of this month. Then they will deliver additional account details in November. For those UBS account holders that moved to any of these affected banks to avoid disclosure and those holding undisclosed accounts at these banks, it sounds bad. As expected the Swiss will do anything to prevent Credit Suisse from prosecution. Even smaller banks with no U.S. footprint seem to be implicated. I see some 50% FBAR penalties on the horizon.



Please make sure that your comment is relevant to the blog entry. For those regular commenters on the blog who otherwise do not want to identify by name, readers would find it helpful if you would choose a unique anonymous indentifier other than just Anonymous. This will help readers identify other comments from a trusted source, so to speak.