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Switzerland parliament rejects US banking treaty

By Dwyer Arce

[JURIST] The Swiss Federal Assembly [official website] on Tuesday rejected an agreement [text, PDF] with the US that would have allowed Swiss bank UBS [corporate website; JURIST news archive] to disclose account information of clients suspected by the US government of tax evasion. The Swiss National Council [official website], the lower house of parliament, voted 104-76 [NYT report] to reject the treaty, opting to send it to a national referendum [Reuters backgrounder] if they cannot reconcile their differences with the upper house of parliament. The agreement would allow UBS to turn over information of 4,450 US clients to the US Internal Revenue Service (IRS) [official website]. The treaty will now return to the Council of States [official website], the upper house of parliament, which voted last week [AP report] to approve the treaty and forgo a referendum. The Swiss government hopes to pass a final version of the agreement before parliament adjourns June 18 [DW report] in order to make the information available by August, a deadline it had agreed to with the Obama administration. The tax conflict has already cost UBS $780 million USD in fines levied by the US Department of Justice [official website] for its admitted assistance [BBC report] of US citizens in avoiding taxes.

The agreement is currently before the parliament due to a court ruling in January, when the Swiss Federal Administrative Court [official website, in French] ruled [JURIST report] that an American taxpayer's financial information at UBS may not be disclosed to the IRS pursuant to the August 2009 agreement [JURIST report]. The agreement was found to conflict with a previous treaty, requiring the approval of parliament. Also in January, the Swiss Federal Administrative Court ruled [JURIST report] that the Swiss Financial Market Supervisory Authority [official website, in German] violated the law in February 2009 when it ordered UBS to disclose information to the US on more than 250 of the bank's clients without the authority to do so. In September, the US and Switzerland signed a treaty [JURIST report] that would increase the amount of information shared between the two nations on would-be tax evaders. The agreement came one month after a Swiss banker and lawyer were indicted in US federal court [JURIST report] for helping clients hide assets. In March 2009, the Swiss announced their intention to adopt a more stringent definition [JURIST report] of tax evasion and to work with other countries to investigate such claims.

Full post as published by JURIST - The Paper Chase on June 08, 2010 (boomark / email).