As Swiss citizen, today I probably ought to write a blog post on the recent evolution regarding the United States of America vs. UBS AG conflict. Having lived and worked in the US in 2008, having enjoyed a constant and mostly enriching exchange with people of diverse opinions at work and in public over an entire year, having memories of an intense and important romantic relationship with an American citizen, it makes me particularly sad to read the countless lines of news articles. I believe, Switzerland doesn’t get much attention in the US. Today we made it on the front page of The New York Times, although, with an incomplete analysis that highlights the failures of UBS without accounting for the arrogance of the IRS. What follows is my opinion.
The core of what in Switzerland in German is called “Bankkundengeheimnis,” bank client secret, is the safeguard of financial privacy. The law does not safeguard fraud and provides legal means against it, anchored within the principles of the Swiss constitutional state. This, ladies and gentlemen, is a privilege and a value, a symbol for the trust of the Swiss government in its citizens.
Unacceptable are untrustworthy customers as well as practices that help clients to illegally hide money. Questioning the law does not tackle the problem at its root. Authorities fail in identifying fraud. Banks fail with law compliance and should toughen their security measures. It might be a simplistic answer, but when I was a child and asked my mother why anybody in Switzerland declares bank accounts if the government can’t know, she always replied: “You can’t have a house and a car in the garage, but not file taxes.” And so, I learned to value our law, to appreciate the trust the Swiss government sets in me.
A good and healthy system can, of course, be exploited. In such cases, based on the Swiss-US agreement on double taxation, laywers of the Swiss tax administration evaluate if the premises are set to provide the IRS with private data of offshore Swiss bank customers. If fraud is confirmed, a court order is enacted by the Swiss tax administration. Affected customers can appeal the order at the federal administrative court. If the appeal is rejected by the court, legal actions are exhausted and the Swiss tax administration immediately provides all required data to the IRS.
This process was in progress since Summer 2008 and the first sentences were expected by March or April 2009. However, according to NZZ, the IRS apparently lost patience in light of the long time period between the submission of their request and the forwarding of the evidence. And so, the US authority executed power over law and forced Switzerland to a precedent that will most likely affect international relations.
Anthony asked, Why Can’t We All Be Friends, and this case might well be another example of authority mistrust, arrogance and superiority towards the law of other countries and a system, however slow, that is meant to meet international interests.