Swiss legislators have destroyed decades of tradition for the benefit of a sloppy Swiss-based big bank.
The legislators have approved a law that clears the way for the government to hand over the names of thousands of alleged U.S. tax evaders to the Internal Revenue Service, dodging the risk that the U.S. would reopen a bruising tax case against Swiss bank UBS AG, according to WSJ.
With the passage of the law, Swiss tax officials, who had suspended processing the 4,450 names, are ready to hand over data on 1,200 accounts, according to a government spokeswoman. So far, the Swiss have sent 500 names of clients who consented to the immediate transfer of their details to the IRS.
What's really going on here is that UBS, with its huge presence in the U.S., was extremely vulnerable to U.S. fines and asset seizures if they didn't play ball with the IRS.
The big bank thus agreed to protect its own hide and agreed to turn names over to the IRS and lobbied the Swiss legislature to change the law and allow the names to be turned over. Naturally, the Swiss legislature rolled over for UBS. Bottom Line: Big bank survives, some U.S account holders, however, headed to jail.
More than 30 years ago, Harry Browne in his book about Swiss Banks pointed out that Swiss banks with large assets in the U.S. were vulnerable to such U.S. pressure. He always recommended dealing with Swiss banks that had no presence in the U.S.