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Swiss Banking After the UBS Scandal » Is Swiss Banking Secrecy Over?

Switzerland is probably known best for maintaining it's commitment to banking secrecy for their financial institution's clientele. In the wake of the UBS scandal, it looks as though for those in the United States, the time of hiding assets in Swiss Banks may be over. However, with Swiss banking contributing to the country's 29 to 1 leverage ratio, the Swiss are not going to simply roll over and allow the U.S. to potentially cost the country billions, if not trillions in annual revenue. Recently, Switzerland filed an Amicus Brief that challenged the IRS's request for the release of 52,000 names of U.S. clients for Switzerland's largest bank, Union Bank of Switzerland (UBS).

The argument that the Swiss support is that the disclosure order provided by the IRS would potentially threaten an existing treaty for the mutual cooperation between Switzerland and the Unites States which is in place "to prevent the likelihood of tax fraud ... "

A Brief provided for the Swiss government's legal counsel stated that "A unilateral attempt by foreign authorities to compel the release of information from Switzerland without the participation or consent of the government of Switzerland would be an infringement of Swiss sovereignty,"

Switzerland's position relies on settling any legal conflicts which may arise between U. S. and Swiss law - focusing intently on  the current tax treaty between the U.S. and the Swiss. Switzerland maintains that the treaty does not require  it to reveal the names of those hiding assets as the IRS had requested. The treaty limits the exchange of information between Switzerland and the U.S. to criminal tax fraud, and fraudulent scams and transactions.

Switzerland holds fast to  its interpretation of the tax policy stating that there have been no changes or agreements that would support the release of names for those hiding assets in Swiss banks. Assistant U.S. Attorney Stuart Gibson has been given the task of extensively reviewing the matter with the executive branch to qualify the U.S. position before moving ahead.

The recent IRS voluntary disclosure guidance allows U.S. taxpayers that have hidden assets in Swiss accounts to come forward until September 23rd, 2009 and only incur financial penalties. However, after the voluntary disclosure period, the IRS may not only assess severe financial penalties, but may also result in criminal charges for non- compliance with the voluntary disclosure guidance and may require criminal penalties, as well as jail time or both.