The IRS’s struggle with Swiss bank UBS to get the names and account information of those U.S. citizens purported to be avoiding taxes by way of offshore bank accounts shook the foundation of Swiss banking practices. Long known for their secrecy and protection of client accounts, Swiss officials were faced with adhering to their banking laws and risking international lawsuit – or giving in to outside pressure and revealing the personal information of certain clients.
After much negotiation, an accord was reached.
Thus far, Swiss banks have mostly been focused on cleansing their American accounts and, earlier this year, announced that it would be closing all offshore bank accounts owned by American clients. However, American citizens only make up about five percent of Switzerland’s offshore bank account business.
While bank officials may have hoped that things would calm down after satisfying U.S. demands, thus far, that has not been the case. European countries such as Germany and France are intensifying their scrutiny of what financial assets may be hidden in Swiss bank accounts.
In response to the increased IRS tax fraud focus, many Swiss banks are enacting measures that make it harder for clients to hide assets, and less appealing for bankers to help them do so. New “due diligence” procedures include pressing clients to confirm that accounts are not meant to hide funds, presenting offshore bank account clients with account tax statements, and preventing questionable clients from fully participating in trading and other bank investment products.
While each bank is approaching the problem differently, all have the same goal – to limit bank accountability in the event of hidden asset charges.
- Swiss Banks Get Tough on Tax-Dodgers (Wall Street Journal)