Head Of Swiss FBC Says Banks Should Be More Co-Operative

by Ulrika Lomas, Tax-News.com, Brussels

24 June 2002

In a speech on Friday to the annual meeting of the Association of Foreign Banks in Switzerland, Daniel Zuberbühler, head of the Swiss Federal Banking Commission, said the Commission was totally committed to banking secrecy, but that it was very difficult to defend Switzerland’s position on tax issues.

Swiss banks, he said, were using Swiss banking secrecy law as grounds for not cooperating fully with international agencies, and ought to ease their restrictions to enable international supervisory bodies to carry out on-site inspections at branches of foreign banks in Switzerland. Mr Zuberbühler instanced Switzerland's refusal to provide information to a US Securities and Exchange Commission investigation into suspected insider trading in 1999 as highlighting the weaknesses of regulations.

Mr Zuberbühler said that over the past five years 21 foreign securities regulators had submitted 228 requests for information to Switzerland relating to roughly 700 customers. Of these requests, 118 had been challenged, with more than half of them being appealed to the Federal Court, which can often take up to a year to reach a decision. In 34 of the 62 cases heard the court blocked the exchange of information.

"Many Swiss bankers still believe that stonewalling on every possible front best preserves the hard core of banking secrecy," said the regulator. “The best protection for Swiss banking secrecy therefore is to be clean in financial sector regulation and consistent in the fight against economic crimes and terrorism,” he concluded.

Zuberbühler’s comments on banking transparency came as European Union leaders meeting in the Spanish city of Seville criticised Switzerland for its reluctance to cooperate on the issue of taxation of EU citizens’ savings. Ministers said they hoped the Swiss authorities would change their minds and acknowledge that all citizens of an EU state should pay witholding tax.

German finance minister, Hans Eichel, said that Switzerland risked becoming more and more isolated, adding:“We really wish that Switzerland would reconsider its position.” But Daniel Eckmann, a spokesman for the Swiss Finance Ministry merely repeated in response that Switzerland had made a generous offer to levy a withholding tax on EU citizens' income from savings and send the money to Brussels.

Switzerland may calculate that with the US quite unlikely to agree to the EU's demands on information exchange, and several other European countries secretly hoping that the Swiss stand their ground, pressure from the EU will eventually abate; and it's true that after trying for some time to hold up discussions on the second set of 'bilaterals' which will draw Switzerland into closer ties with the EU, Brussels agreed last week to re-commence the talks. Swiss and EU negotiators held a first meeting in Bern on Tuesday to try to resolve their differences on the taxation issue, but were not thought to have made significant headway.

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