Switzerland Publishes Certain Identifying Information of Certain Foreign Depositors in Swiss Banks (5/27/15)

When Switzerland makes a decision to turn over bank information of a foreign depositor upon request of a treaty party, the depositor is entitled to invoke procedures under Swiss law to test whether the turn over is appropriate.  This requires that the Swiss authority notify the depositor so that the depositor can invoke the procedure.  But, what to do when the depositor has disappeared from the bank's radar screen and the bank does not know how to contact the depositor?  "In such cases the tax authorities notify the account holder via the government’s online gazette – sometimes giving the full name of the client and in other instances just the initials and date of birth."  See Swiss naming of suspected tax cheats causes waves (Swissinfo 5/25/15), here.

Of course, it is not at all clear just how much relief a foreign depositor would get by invoking such relief.  There have been isolated reports of success, but I suspect that, in this ongoing saga, Switzerland will be less and less inclined to forego the treaty country requests simply because the foreign depositors seeks relief in the Swiss system.  Perhaps more importantly, I wonder whether those U.S. depositors whose names are published will still qualify for the OVDP or Streamlined.  Keep in mind that the issue is whether the Swiss will turn over pursuant to a treaty request, so, at least as to the U.S., the U.S. must have had some type of identifier information to make the request.  Group requests -- or as I call them, John Doe Requests -- made with information from the Category 2 banks would not be specific information of identity, but might be sufficient for the IRS to claim that those depositors were already effectively under audit.

Further, as the Swissinfo article notes:

A change to the Swiss law last year allows the tax authorities to withhold from the account holder the fact that it is cooperating with a foreign jurisdiction. But this applies only under certain circumstances, such as when the requesting country feels the person under investigation may destroy evidence. 

Finally, U.S. depositors should keep in mind in considering invoking procedures to avoid the turn over that they are required to serve the papers also on the Attorney General.  See 18 USC § 3506, here, titled Service of papers filed in opposition to official request by United States to foreign government for criminal evidence.  There is no specific penalty in the statute for violating this obligation to serve the papers, but the failure to do so could be a key component in meeting the elements of the panoply of crimes that might be charged.