Switzerland, long a destination for international criminals wishing to launder money and evade taxes, is finally relenting to pressure from the United States and other Western states to conform to international law.
Balz Bruppacher for AP:
The Swiss government said Friday it would cooperate on cases of international tax evasion, breaking with a long-standing tradition of protecting wealthy foreigners accused of hiding billions of dollars in the Alpine nation. The government insisted it would hold onto its cherished banking secrecy rules, but said other countries could now expect Swiss cooperation in cases where they provide compelling evidence of tax evasion. “We want assistance to be restricted to individual cases to prevent fishing expeditions,” President Hans-Rudolf Merz told a news conference, referring to the practice of seeking information about many individuals in the hope of discovering a few tax evaders.
A number of countries are hoping to avoid being blacklisted by world powers when they meet in April to discuss stepping up their fight against tax cheats. Austria and Luxembourg also said Friday they would step up cooperation on tax probes. But the greatest pressure has been on Switzerland, which is embroiled in a dispute with the United States over wealthy Americans that have stashed money in its biggest bank, UBS AG.
Swiss authorities have provided the U.S. with the bank details of up to 300 wealthy Americans suspected of tax fraud, but refuse to identify about 50,000 more U.S. account holders Washington wants. The bank, and the government, have said further cooperation would violate Swiss law, which makes an unclear distinction between the serious crime of tax fraud and the minor offense of tax evasion.
Merz said the country — which already works with other countries to fight terror financing and return dictator cash — will now adopt standards set by the Paris-based Organization for Economic Cooperation and Development for countries working together against tax evasion. Switzerland had refused to commit to the standards since they were written in 2000 for fear of compromising banking secrecy rules. “Banking secrecy does not protect tax crimes,” Merz said. The change, he added, “will increase the acceptance of the (Swiss) financial center and give customers greater confidence” and safeguard jobs in a sector that employs tens of thousands of people in Switzerland.
It’s high time this happened. It’s one thing to protect the privacy of well-to-do businessmen seeking to protect their money and quite another to aid and abet criminal activity.
James Joyner is managing editor of the Atlantic Council.