Swiss parliament rejects deal to hand over account details to US authorities

News - Banking

Written by Ray Clancy

Wednesday, 09 June 2010 10:00

A deal that would have paved the way for Swiss banking giant UBS to reveal the account details of thousands of US citizens has been rejected by the lower house of the Swiss parliament.

US tax authorities claim that up to 4,450 of its citizens hold secret accounts with UBS and the bank has admitted that it has in the past helped them to evade taxes. A deal had been agreed to avoid the US taking legal action to get the information but the vote now puts that in jeopardy.

The saga is being closely watched as the transfer of the account details would mark a step towards the end of Switzerland’s traditional banking secrecy. There is now doubt about when the deal will be concluded although most experts expect it to go ahead at some point but not by August as had been expected.

The deal will have to go back to the Swiss Senate for revision, with a nationwide referendum one possible outcome.

‘We continue to monitor the events in Switzerland and we stand ready to pursue all legal options available to us should the Swiss fail to provide the required information,’ said a spokesman for the Internal Revenue Service, the US government tax collection and enforcement agency.

A senior Democratic Senator Carl Levin said a rejection of the treaty by Switzerland would be an international embarrassment. ‘The United States should reject any further attempts by the Swiss to delay the UBS case,’ added Levin who called for court action to be brought.

In a statement after the vote, the Swiss Bankers Association criticized the lower house. ‘Party political calculations took priority over the national interest. A negative decision would strain even further the important bilateral relations between Switzerland and the US and it would unnecessarily threaten Switzerland’s standing as an economic and financial centre at a time when economic conditions are already difficult enough,’ it said.

The US had originally demanded the details of 50,000 American account holders. The bank had previously handed over details of around 250 clients and agreed to pay $780 million in a separate case.