Switzerland’s parliament has blocked debate on a new piece of legislation that could compromise the country’s strict banking secrecy laws. The United States previously asked Switzerland to implement new legislation giving American regulator access to Swiss banking customers’ account information.
Long known for its strict banking laws, Switzerland remains one of Europe’s largest financial centres. The country is currently in the spotlight due to recent revelations that indicated Swiss banks had worked with American account holders to avoid US taxes, without disclosing any information to the US Internal Revenue Service.
The country’s lower house of parliament voted against discussing the bill, with 126 votes out of 193 opposed to the bill’s introduction. The bill aims to give Swiss banks the ability to bypass the country’s strict secrecy requirements and discuss accounts and client information with US authorities.
Switzerland’s large financial sector faces possible fines from the United States due to its violations of US financial reporting laws. Swiss bank Wegelin and Co., a 270-year-old financial services company that was formerly Switzerland’s oldest bank, closed its doors in early 2013 after being indicted for assisting US citizens in tax evasion.
The efforts of US investigators to stop tax evasion using Swiss banks have increased banking security in the country, with numerous mainstream Swiss financial firms no longer accepting US citizens as clients. Many US expatriates residing in Switzerland report being turned away from Swiss banks due to US-Swiss tax reporting disputes.
For Switzerland’s large financial sector, the bill represents both progress and a large threat to their operations. If the bill is passed – which seems unlikely – it will protect banks from US indictment, yet rob them of their biggest benefit for US-based clients: their incredible level of accounting secrecy.
