Switzerland to relax banking secrecy law

Source:By Abigail Townsend Telegraph

The Swiss government has bowed to international pressure and agreed to relax the stringent secrecy rules that govern its banks. In a statement ahead of Saturday’s meeting of G20 finance ministers, where offshore banking will be discussed, the government said it would adopt Organisation for Economic Co-operation and Development standards and co-operate with countries investigating tax evasion.

“Banking secrecy does not protect any form of tax offence,” it added. “With the globalisation of financial markets and in particular the current financial crisis, international co-operation on tax matters has become increasingly important.”Gordon Brown welcome the move, adding that it was “important for [Switzerland] to move swiftly to implementation”.

The landmark decision comes amid growing calls for a crackdown on tax havens. There had been threats to include Switzerland on the OECD’s blacklist of uncooperative tax havens, something the world’s biggest offshore financial centre was keen to avoid.

It has also come under pressure from the US, where lawyers want UBS to hand over client details as part of an investigation into tax fraud. But while Switzerland acknowledged concerns about tax havens, it also stoutly defended banking secrecy.

Any co-operation would be on a case-by-case basis only, it said, adding: “[The Federal Council] fully endorses banking secrecy and resolutely rejects any form of automatic exchange of information. The privacy of customers will continue to be protected from unauthorised access to information concerning private assets.”

It will also continue to fight the US over the UBS case. Jean Schaffner, tax partner at Allen & Overy, said it was “a good compromise”, adding: “It is not acceptable for bigger countries to use their economic power to pressure governments into revealing confidential banking information. We don’t anticipate that these announcements will significantly impact the private banking industry.”

Austria and Luxembourg also pledged increased co-operation last week .