Switzerland Vetoes OECD Proposal on Bank Secrecy in Tax Evasion Cases

Article excerpt

BERN, Switzerland -- Under major pressure from banking circles, the Swiss government has vetoed a suggestion by the Paris-based Organization for Economic Cooperation and Development, or OECD, that banking secrecy should be eased in Europe.

Austria and Luxembourg, both of which have similar with laws on banking secrecy, voted with Switzerland in vetoing the OECD secretariat's recommendation July 3 that banking secrecy rules be eased to help counter tax evasion.

Sources at the Finance Ministry have said the Swiss delegation at the OECD had vetoed the rules because the feeling in Switzerland is that local secrecy rules in banking are already being relaxed sufficiently.

In recent years, Switzerland, under pressure from foreign regulatory bodies, such as the U.S. Securities and Exchange Commission, has relaxed rules to such an extent that information on alleged "laundering" of foreign money can be released if there is proof of criminal intent.

If the OECD code had been accepted, it would have made bankers in every member country liable to reveal all on banking matters if tax evasion could be proved.

But since the organization's rules require that all member countries agree to a recommendation, the "no" vote of Switzerland, Austria, and Luxembourg effectively stopped the plan in its tracks.

The United States, backed by Britain and the Scandinavian countries, had backed the proposal on the grounds that it would make transboundary shipment of capital for tax avoidance purposes harder.

But the Swiss government, which is already under pressure from the banking sector here for allegedly giving up too much to the Americans, decided to dig in its heels. …