Reuters: Regulatory News: Swiss court blocks handout of bank data to U.S.

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Swiss court blocks handout of bank data to U.S. Apr 11th 2012, 10:09 Wed Apr 11, 2012 6:09am EDT * Data of C.Suisse client may not be delivered, court finds * Court finds U.S. request too vague, did not have client's name * Swiss banks under U.S. scrutiny for helping Americans dodge taxes ZURICH, April 11 (Reuters) - A top Swiss court ruled Switzerland may not hand over the bank details of a Credit Suisse client to U.S. tax authorities, in a potential setback to solving a dispute between the two countries. Switzerland and the United States have for years been locked in a conflict over the fact that wealthy Americans are dodging taxes by hiding money in Swiss accounts. Washington is pressuring banks in Switzerland to divulge their names and financial details. In a ruling published on Wednesday that cannot be appealed, Switzerland's Federal Administrative Court said the tax office was not allowed to hand over information on a Credit Suisse client to the U.S. Internal Revenue Service because its request was based solely on a suspicion of tax evasion and did not include the bank account holder's name. Unlike most countries, Switzerland has distinguished between tax fraud, which is illegal, and tax evasion, which is not. Under a new deal, which has yet to be ratified by the United States, Switzerland would assist U.S. authorities in cases of tax evasion as well as tax fraud. Eleven Swiss banks including Credit Suisse and Julius Baer are under investigation in the United States for aiding U.S. citizens who are suspected of dodging taxes. Switzerland is trying to get the investigations dropped in return for the payment of fines and the transfer of U.S. client names and is also seeking a deal to shield the remainder of its 300-odd banks from U.S. prosecution. Flagship bank UBS in 2009 was forced to pay a fine and release the names of 4,500 clients to U.S. officials as the government was forced to bend Switzerland's long-cherished secrecy laws, which have underpinned its large financial sector. The deal over UBS data was later upended by a Swiss court, citing a breach of bank secrecy, forcing the government to turn to parliament to push the deal through. In an attempt to avoid a repeat of such legal wrangles holding up a new deal, the Swiss parliament approved in February a plan that would allow U.S. officials to request information on suspected tax cheats based solely on their behaviour rather than name or bank account number. A spokesman for Credit Suisse declined to comment and said the Zurich-listed bank had not been a direct party in the case. Link this Share this Digg this Email Reprints

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