UBS Case Weakens Swiss Bank Secrecy
Professor Kenneth Scott is quoted in the San Francisco Chronicle concerning Swiss Bank UBS, which has agreed to disclose names of U.S. account holders to the IRS:
Is Swiss banking secrecy as holey as its cheese?
That question comes to mind after the Swiss government agreed last week to facilitate a settlement under which UBS will turn over the names of about 4,450 accounts held in the Swiss bank by American residents to the Internal Revenue Service.
Bank secrecy "is what the Swiss trade in; this and watches and chocolate," says Christopher Bergen, president and publisher of Tax Analysts.
Despite its famed privacy laws, "there are always provisions under which Switzerland would break bank secrecy," says Andrew Pike, a professor of tax law at American University. For example, if funds in a Swiss bank account were used to pay a contract killer, "that's enough of a crime that Switzerland would say we are not going to protect contract killers. Tax fraud has not been viewed as a real enough crime that would justify that."
What distinguishes last week's agreement "is that you have (a Swiss bank) disclosing thousands of accounts to a tax authority in another country. It's not a particular person or handful of cases," says Ken Scott, a Stanford University professor of business and law. "It has moved to a different level. It makes a lot of people think, this may reach me."