When you don’t have many claims to fame, you need to work hard at protecting the ones you do have.
The history of Swiss banks dates back to several centuries ago. The French kings were the first Swiss banks clients and they highly valued confidentiality and security. One of the first legal acts regulating the bank secrecy dates back to that epoch.
In 1713 The Grand Council of the Canton of Geneva passed banking regulations that imposed an obligation to keep a registry of their clients and their operations. Disclosing such information to any third parties without express permission of the City Council was strictly prohibited.
Owing to this long tradition bank secrecy requirements in Switzerland are the strictest in the world. The bank secrecy requirements apply to tax evasion – under Swiss Law the refusal to provide information about one’s property or income is not considered a crime.
A banker shall be held liable either criminally or managerially if he infringes the secrecy and discloses any confidential information about a client without his assent (excepting grave crime such as drugs and arms smuggling).
One of the largest Swiss Banks, UBS, was taken to court in Miami a couple of months ago, after refusing a demand by the U.S. Internal Revenue Service to disclose data on 52,000 American holders of secret Swiss bank accounts to U.S. tax authorities, which would breach Swiss bank secrecy.
It was a bitter battle, during which the Swiss accused the Americans of seeking to ‘provoke international conflict’. Whoa!
Unfortunately for UBS, they have 27,000 staff in the US and lost billions of dollars in the global financial crisis, requiring a bail out by the American government. Behind the scenes diplomats scurried anxiously around. The Swiss Defence Minister offered to take prisoners from Guantanamo Bay if the Americans would back off their bank (yes, really!) – finally Roman Polanski’s head was delivered on a golden platter to the US authorities, and the case was settled with a mild rebuke and a demand for $780 million dollars to be paid to the IRS. Oh, and the Swiss bank agreed to provide details of an paltry 4,450 account holders some time in 2010. Assuming they still held accounts then. Assuming they hadn’t fled to another Tax haven by that time.
In order to give their clients a head start in the race to hide their finances – UBS sent each of its 52,000 American clients, not just the 4,450 earmarked for disclosure, even those who had specifically requested ‘no mail’ from the bank, a registered letter firmly marked ‘UBS Switzerland’ warning them that their details might have to be handed over next year.
Needless to say, the US Inland Revenue which works closely with the US Postal department now has a complete list of all those Americans who received a registered letter marked ‘UBS Switzerland’……….
‘The hills are alive with the sound of Inland Revenue laughter’…….