ZURICH, SWITZERLAND – US pressure on the Swiss banking world appears to have claimed one more victim, with the announcement by St Gallen-based Wegelin, generally considered the country’s oldest bank, to sell most of its wealth management business to Raiffeisen in an effort to protect its employees and clients.
Wegelin one of 11 banks investigated by US, 2 countries finance ministers set deadline
The news comes just a day after Swiss President Eveline Widmer-Schlumpf told reporters in Davos that the US and Switzerland hope to conclude tax treaty talks by the end of 2012. She made her remarks after meeting with US Treasury Secretary Timothy Geithner at the World Economic Forum.
The discussions have been the subject of much media speculation, both for their timeline and a likely financial settlement, with some reports in late 2011 that Switzerland had proposed amounts, information denied by the Swiss Tax Office to GenevaLunch. Bloomberg/Business Week quotes the president as saying that “I have expressed that we’ve been in talks for a year, that we’ve invested a lot of time and energy to propose a fair solution,” adding that the two have discussed amounts and that “our aim, and he agreed, is to find a solution where we won’t be confronted with a question about the past every year.”
Reuters noted that the amounts are “possible fines [Switzerland's] banking industry will have to secure a global civil settlement with US authorities” and that Switzerland “is also trying to get the U.S. Department of Justice to drop criminal probes of 11 banks, including Credit Suisse and Julius Baer. “‘I assume we will be able to sort it out for these 11 banks as well as for the banking sector as a whole,’ she said.”
What next for Wegelin clients, staff
A statement issued by Wegelin and Raiffeisen says that “a substantial majority of clients and staff will be transferred to Notenstein Private Bank Ltd, which will become a 100% subsidiary of Raiffeisen for an undisclosed sum. This transaction enables Raiffeisen to substantially strengthen its position in wealth management. Wegelin & Co. Private Bankers will remain in existence to finalize the closure of all remaining US client relationships and to continue the negotiations with the US justice authorities.”
Proposal would allow bank account numbers, balances, capital transactions to be shared in anti-terrorism, money laundering cases
Seeking the full story on money laundering: new Swiss banking secrecy rules may lie ahead
BERN, SWITZERLAND – Swiss banking secrecy could be in for its first serious change, in addition to the pending double taxation treaty with the US.
Wednesday 18 January the Federal Council put out for consultation an amendment to the Money Laundering Law that would allow Swiss authorities to share, with certain foreign government agencies, bank account numbers, information on capital transactions and bank account balances. The information could be supplied if requested as part of money laundering and anti-terrorism investigations.
Today’s proposed legislative changes will now be sent out for consultation until the end of April, at which point the pre-project proposal will be adapted in line with remarks submitted, before it goes through further legislative hoops.
The Swiss-US treaty, which has not yet been approved by parliament, would allow the US to ask for bank data without first providing a name and account number, in a very limited number of cases. It has been reported by US media as a breach in the wall of Swiss banking secrecy, but in Switzerland it is negatively viewed by some politicians as simply a concession to one large nation.
The new proposal would have a far broader impact, affecting working relations with financial investigators in 126 other countries. Support for money laundering laws has, in contrast, been stronger in Switzerland, with the government pushing in recent years to uncover illegal assets of political leaders from elsewhere. As a result, “Switzerland has returned about CHF 1.7 billion to their countries of origin, which is more than any other financial center of a comparable size”, Bern notes, but exchanges with other governments have been hampered by Swiss banking secrecy laws.
Swiss agency will also be allowed to request more information
The changes would also work in the other direction, giving MROS (Money Laundering Reporting Office Switzerland), the agency through which such requests are made, the power to obtain more information from its counterparts abroad than it can today, given the constraints of Swiss banking secrecy laws.
In future MROS would also be able to demand financial details from third parties that have not themselves announced suspect financial activity, not possible today because of banking secrecy constraints. The government argues, in a statement on the proposed changes, that such occasional requests would improve the quality of the information Switzerland can supply other governments as well as information on suspect cases generated here.
The news was announced in the context of efforts by the federal government to reinforce efforts to fight money laundering and to strengthen the Swiss financial industry. Swiss bankers have been under pressure from other governments, in particular to provide information to tax authorities.
Credit Suissse and 10 other banks are currently under investigation by the US Department of Justice on suspicion of helping wealthy Americans avoid taxes.
The proposal is the result of MROS being the only agency among the Egmont group of Financial Intelligence Units (FIUs) from 127 countries that does not share financial information. The Egmont group in July 2011 decided that MROS’s refusal to share information, on the grounds it contravened Swiss law, runs against the group;s principles, and it threatened to suspend Switzerland unless it showed, within a year, that it is undertaking the steps necessary to change the law.
Swiss banking secrecy intact with insistance on “no fishing expeditions”
Swiss parliament in session Photo ©Swiss parliament
Swiss parliament in session Photo ©Swiss parliament
Treaty agreements interpretations clearer, says Bern
Bern, Switzerland (GeenvaLunch) – The Swiss Federal Council is asking parliament’s authorization to amend double taxation treaties (DTT) with a number of countries, to more precisely define what is meant by “administrative assistance”. The term covers requests for help, from one government to another, in cases of suspected tax fraud or tax evasion.
The announcement 6 April comes two months after the council agreed that the amendments are necessary because the more precise interpretations were not available when the treaties were signed in June 2010. They will affect treaties with: Denmark, Finland, France, the UK, Qatar, Luxembourg, Mexico, Norway and Austria. A DTT signed with the US will also require an amendment, to be handled separately.
Parliament must be consulted for any changes to the treaties, under Swiss law.
Switzerland has in the past insisted that help could be provided only if a bank account owner was identified, but in February 2011 the ruling Federal Council agreed that an interpretation clause should stipulate that “in future indicating the name and address of the taxpayer and the information holder is no longer absolutely necessary for processing administrative assistance requests, provided that the identification occurs by other means and fishing expeditions are not involved.”
The interpretation clause is necessary, the council argues, to ensure that all states in the treaties have a level playing field and to avoid a “foreseeable obstacle” if Switzerland’s assistance is not deemed to be in line with the treaty because of varying intepretations. The clause will reduce “the risk of failure in the peer review process of the Global Forum on Transparency and Exchange of Information for Tax Purposes”. the council says in a press release.
Tax assistance only for individual cases: amendments will not change this
Washington, DC and Bern, Switzerland (GenevaLunch) - US federal district court judge Alan Gold, who is handling the case of the US Justice Department against Swiss bank UBS, has asked the American government to clarify its position, reports Swiss financial news agency AWP.
Bern, Switzerland (GenevaLunch) – The Swiss government Wednesday 8 July issued a terse statement saying it replied to a US federal court in Miami, Florida that UBS, Switzerland’s largest bank, cannot under Swiss privacy laws share client data. The statement adds that “the government of Switzerland also points out that the necessary measures to implement Swiss law have been prepared”, without providing details.
Patrick Odier with Brady Dougan, CEO of Credit Suisse, at a 2008 American International Club of Geneva meeting
Ed. note: we apologize for the technical problem that caused an early, unedited version of this article to reappear on the site
Geneva and Basel, Switzerland (GenevaLunch) – Patrick Odier, 54, will succeed Pierre Mirabeau 17 September 2009 as the chairman of the Swiss Bankers Association. Mirabeau is retiring after six years in the post, which he said in 2003 was the maximum time he would hold the position. Odier, a senior partner at the Geneva private bank Lombard Odier Darier Hentsch & Cie, has been a member of the board since September 2008.
Odier told the association after he was nominated that “protecting financial privacy in terms of data protection for all bank clients will remain an important responsibility for us as Swiss bankers in future.”
The long-term protection of financial privacy domestically and internationally will remain a priority, the association’s press release notes. A key goal for Odier will be to strengthen Switzerland as a financial centre. To reach this goal every banker must adhere to the highest levels of ethical conduct.”
Mirabeau’s tenure as chairman covered a tumultuous period for Swiss banking, from the global economic crisis to what the association describes as the intensified “focus on the issue of bank-client confidentiality.” Mirabeau is credited by the association with the “Swiss banking establishment agreeing to adopt OECD 26 with respect to administrative assistance in tax matters.”
Patrick Odier holds an economics degree from the University of Geneva and an MBA in finance from the University of Chicago in the US. He joined LombardOdier & Cie in 1982 and completed his training in Zurich, New York and Montreal, before becoming a managing partner in 1986. He became senior partner of Lombard Odier Darier Hentsch & Cie in July 2008. He is vice-chairman of economiesuisse (the Swiss federation of trade and industry), a founding member of the Foundation Board of the Swiss Finance Institute, as well as vice-chairman of the Geneva Financial Center.
Bern, Switzerland (GenevaLunch) – Switzerland made no concessions to the US in the tax agreement that was initialed 18 June, and the case of UBS, which is being taken to court in the US to reveal names of account holders, was not part of the discussions, says Swiss President Hans-Rudolf Merz.
Geneva, Switzerland (GenevaLunch) – Money has not been flowing out of Swiss banks in a significant way as a result of the government’s decision in March 2009 to ease its strict interpretation of banking secrecy, “There has been no meaningful outflow of assets” from Swiss banks since Switzerland said it would adopt Art. 26 of the OECD (Organisation for Economic Cooperation and Development) Model Tax Convention, says Pierre Mirabaud, president of the Swiss Bankers Association. The convention obliges Switzerland to renegotiate tax treaties with other countries.
Mirabeau, speaking to the American International Club of Geneva 27 May, said the main factor that will lead to Swiss banks regaining trust is for them to begin to be profitable again. Asset values have dropped across the board because of very poor market conditions since the onset of the crisis late last year, but this has affected all banks.
Swiss parliament in session - Photo®Swiss parliament
Update 14:00 Bern, Switzerland (GenevaLunch) – The Swiss lower house of Parliament held an emergency debate Wednesday morning on the issues surrounding bank secrecy, after the upper house held a debate Tuesday.
Political parties differed widely on how the governing Federal Council should react to pressure from abroad on Swiss banking secrecy laws, but they agreed on one thing: the Swiss government should take the initiative in fighting “attacks from abroad,” as TSR puts it.
Background, Le Temps
Updated 19:40 Bern, Switzerland (GenevaLunch) – The Swiss government Friday noon announced that it will adopt the OECD standard on administrative assistance in tax matters, which is part of the OECD’s Model Tax Convention. As a result Switzerland will exchange information with other governments in individual cases where “a specific and justified request has been made” for any form of tax offense. Accepting the standard will require renegotiating existing bilateral treaties. Requests from other governments, made according to the standard, will be honoured once new treaties go into effect.
Ed. note: it was widely reported Friday that Switzerland has agreed to assist other governments in cases of tax evasion, not just fraud. While this may be the result of the 13 March announcement, Switzerland specifically states that it intends to adopt the convention “in accordance with Art. 26 of the OECD Model Tax Convention.”
Update 13:10 Press conference with Swiss president, video on Federal TV
Bern, Switzerland (GenevaLunch) - Pressure appears to be increasing on Switzerland to announce concrete changes to its fiscal cooperation strategy with the G20 countries, following announcements Thursday by Liechtenstein and Andorra that they will ease their banking secrecy laws. Swiss President and Finance Minister Hans-Rudolph Merz and the cabinet will announce Friday noon some of the steps the government is taking.
Geneva, Switzerland (Le Temps, Fre) – Le Temps 13 March carries a lengthy article about the story behind some of the 258 client names released by Swiss bank UBS to the IRS, the US tax collector. Douglas Hornung, a Geneva-based lawyer who represents four of the people whose names were given to the IRS with the agreement of Finma (Swiss banks supervisory body), says his clients were not informed that their names were on the list, and in the case of two of them, an American couple resident in the US, they were not informed in January that an investigation was underway.
Bern, Switzerland (TSR, Fre) – All but one of Switzerland’s main political parties have agreed to an urgent debate on banking secrecy, protected under Swiss law, during the third week of the Spring session of Parliament, which opened 2 March, virtually ensuring it will be put on the agenda.
Peter Kurer, chairman, UBS: calls to oust him
Updated 14:30 UBS shares Monday fell to a historic low of CHF10.30, down 3.5% since Friday closing. Swatch’s Nicolas Hayek told Swiss financial paper Agefi that his company has pulled some of its money out of Credit Suisse and UBS for fear they might go bankrupt, and put some of it into La Poste. He refers to the bankers as “robbers and idiots.”
Zurich, Switzerland (TSR, Fre) – UBS is accusing the US government of ignoring Swiss law, under which Swiss banks must operate or lose their licenses, in its response to a US court in Florida. The bank says that the court, which 19 February began civil proceedings against it to obtain the names of 52,000 American holders of UBS bank accounts, is expecting its employees to put themselves at risk of serious penalties including lengthy prison terms.
Florida, USA, Bern and Zurich, Switzerland (GenevaLunch) – The US Department of Justice (DOJ) is taking UBS to court to obtain the names of 52,000 clients of the bank: these are US citizens who, the US government says, have not declared to the IRS all their financial information. “At a time when millions of Americans are losing their jobs, their homes and their health care, it is appalling that more than 50,000 of the wealthiest among us have actively sought to evade their civic and legal duty to pay taxes,” said John DiCicco, acting assistant attorney general for the DOJ’s tax division, in the DOJ’s statement on the case.
Updated 16:55 Zurich and Bern, Switzerland (Le Temps, Fre) – Le Temps Wednesday afternoon 18 February reports the potentially explosive news, not confirmed officially, that UBS, which has been under investigation by the IRS (Internal Revenue Service: tax authority) in the US, will turn over the names of 250 clients to the American Justice Department. Le Temps credits several sources, which it does not name. It notes that UBS, which has resisted pressure over providing names until now, “in the process, weakens the Swiss financial centre.”
Fort Lauderdale, Florida, US and Zurich, Switzerland (GenevaLunch) – Raoul Weil, UBS head of Global Wealth Management & Business Banking who temporarily resigned from his job in November 2008 has been declared a fugitive from justice by a judge in Fort Lauderdale, Florida, after he failed to appear in court there.
Weil’s lawyers in New York have called fraud charges and the latest move “unjustifiable,” TSR reports. The designation is not likely to have an immediate impact on Weil’s direct participation in the US investigation because Switzerland, like most European countries, does not extradite its own citizens. The Swiss Justice Department Wednesday would not say if a request for Weil’s extradition had been made by American authorities. Ed. note: countries with Anglosaxon legal systems, including the US, will extradite their own citizens under the terms of some treaties, but the process can be long and complex.
Weil resigned from his job in November for the duration of the investigation. The bank has not commented publicly on his new fugitive status.
