I was rather surprised that no one has been discussing "bank secrecy" on here. Anyway, UBS has been in The New York Times and Wall Street Journal this past week, discussing how there is no longer any bank secrecy for American customers (not only that, but those with American citizenship who live in Switzerland!). It reminds me of emails I had with a Swiss friend I met on here...

There had been some "unfriendly" discussion about Germany and the privacy of pecuniary information in Switzerland during the past year (the Swiss press thanks Peer Steinbrück) -- and the Swiss were up in arms that the Germans wanted information revealed. The Swiss gave *everything* over to the Americans awhile ago and didn't make a peep... That included my information (I owned no taxes, but had an account at UBS).

The newest articles in English on *the end* of Swiss bank secrecy: http://www.nytimes.com/2009/01/09/bu...&sq=UBS&st=cse and http://online.wsj.com/article/SB1231...rsonal_journal )

I know that not long ago UBS and CS were both seriously considering to completely exit the US market. That way they would not fall under US jurisdiction anymore and would not need to comply with and US regulations..... don't know what the latest status of those assessments is.

The funny bit was referring to the fact that the Swiss didn't object to the Americans, but were up in arms about the Germans when it came to "bank secrecy"... Neither UBS nor CS will exit the American market -- trust me, especially since CS bought out First Boston long ago. UBS is still here too!

Let's say, a source close to the matter told me that they are seriously considering an exit..... especially now, as they are also reconsidering the i-banking activities it might make sense to combine an i-banking exit with an exit from the NA market and only focus on offshore banking for American clients. However, as I said that was some time ago - not sure what the latest thinking is around that.

I should probably come back here more often. Anyway: UBS handed over information for all accounts held by American citizens in Switzerland. It had nothing to do with direct banking in the United States. It had to do with individuals who have American citizenship and bank accounts inside of Switzerland. Peer Steinbrück isn't complaining, so who cares, eh?

Executive at UBS Is Named a Fugitive

What to Do if UBS Is Outing Your Secret Account

I think "the public" is concerned about the attacks on the banking secret from other countries than Germany, too. But without a figurehead, the American efforts will be much less present in the popular press. I'm also curious about the public memory of related issues, for example the American access to SWIFT some years ago.

US arrogance:
- the SWIFT incident
- the only 1st world country that taxes non-residents
- lots of wealth management needed so banks will comply to get a piece of the action

The other factor is that banking secrecy does not apply for criminal activities... what has happened breaks US law.
Of course, it suits to accept this for the US customers,

Germany is just mouthing off, IMHO. The last thing the policitians and establishment want is publicity for all their Swiss bank accounts avoiding German taxes...

Edit: discussed here too

What information has UBS been giving to their US customers before this happened? I cannot imagine that UBS is doing this without having enough to cover them. I.e. forms that you sign when you open your account that you are not a US citizen and things like that. I vaguely remember myself having gotten a letter like that from UBS years ago that I had to sign.

I also remember that all the Swiss banks very clearly informed their customers well in advance (so that you had time to react) about the new EU rules that came into effect last year so I have to presume that they have done something similar with the US citizens case.

As far as I know it has to be a criminal offense in Switzerland (tax evasion isn't). So there must be something else going on with the US case. Could it be the fact that they are acting as a bank in the US that makes the US branch of UBS liable to disclose information?

Reuters reported this last week (Fri Jan 9, 2009): UBS closing U.S. clients' offshore accounts

on the other hand they will continue to be free to lose their ass trading American assets on the American market...

Checkmate...

Even the Swiss commentators in the NZZ and Tages Anzeiger cannot agree what the latest "agreement" means.

Edit: I should have added that the British are now after Switzerland (according to today's / yesterday's Guardian [19th]). Everyone is going to jump into this stupid loophole. It is really weird that Pres. Merz claims that bank secrecy, as it previously existed, remains. It is over.

http://www.tagesanzeiger.ch/schweiz/...story/24296161
("Bank Secrecy: Now Only a Myth")

http://www.nzz.ch/nachrichten/starts...1.2043513.html
(Title is a quote from Merz: "Bank Secrecy Still Exists")

http://www.nzz.ch/nachrichten/wirtsc...1.2038538.html
("Zürich with its Back to the Wall", i.e., Zürich's importance in international finance is in question... literal translation is "Financial Center with its Back to the Wall".)

In English: http://www.reuters.com/article/newsO...51I1ZP20090219 "UBS tax deal is Swiss bank secrecy's Waterloo"; http://www.ft.com/cms/s/0/194c97a2-f...nclick_check=1 "Not-so-safe havens"; etc. etc.

Should have included:

"The EU could forbid Swiss banks' activities in the case of an emergency "
http://www.tagesanzeiger.ch/schweiz/...story/17482053

It goes on and on...

Despite all the posturing by the Swiss politicians and their strong assertations that the Bank Secrecy remains sacrosanct, I think it's pretty fair to say that if it's not already expired it's certainly on its death bed. The EU have lined up demanding equal treatment and I doubt that CH will be able to resist the pressure any longer. The secrecy rules are an anacronism that are now a little outdated and they will be thrown on the scrap pile. I've no doubt that there will be much wringing of hands and complaining about foreign influence - who knows, perhaps we can even look forward to another in-yer-face 'kin annoying insulting SVP poster campaign

Hmm... I don't understand much about banking... but did UBS not give the data out of their "own" will, not ordered by the state??

That would mean for the state the banking secrecy is still "untouched" (in theory... just trying to form my thoughts here).
Therefore nobody else should have a right to additional information...

Is that a possible angle??

You really do not understand very much about the matter. The point is that the Swiss government always protected the privacy of the banks clients, even if they are alleged tax fraudsters. There is Swiss law, there is US law and there are contracts between both countries how to deal with US customers who have money in Switzerland.

In this case, the Bundesrat, the executive branch of the government, pretty surprisingly in the middle of a case made the decision to open the books. It is not clear if this is actually illegal according to Swiss laws and it is definitely against the way the government works: This should not be decided by the Bundesrat, but by the judges...

so what made the Bundesrat to behave this way? That is what the media is discussing. It is good for the UBS in the short run, but pretty bad for the country and financial place in the long run... the signal is that you cannot really say if your data is safe here anymore as it used to be.... and there are some pretty wealthy people bringing business here based on that fact. If this is ethical is a completely different story...

Whether or not Swiss banking secrecy is dead depends to a large extent on what the Swiss government does next. The IRS and the US justice system was able to exert big pressure on UBS because UBS has business interests in America. You can argue whether UBS is a Swiss bank or not till the cows come home, so let's not. But the fact is that it's global presence leaves it exposed to the strong arm tactics of foreign governments. What I mean to say is that many private swiss banks do not have an offshore presence. It would be impossible for foreign governments to twist their arms if the Swiss government does not acquiesce and it is not clear that they would do this without evidence of actual tax fraud.

Has Swiss banking secrecy come through this intact? Clearly not, though I can understand why Merz wants the world to believe it has! Is it dead? I doubt it, though I can understand why the IRS wants to scare it's citizens into believing it is. As always, the truth lies somewhere in the middle.

Very good post. The question remains: Is the middle good enough when there are other places offering a clearer message?

I guess it depends on what you're trying to hide. For the vast majority of people with not much to hide but their money (no fraud, money laundering, crimes against humanity, etc) then they can live with some thinning of the veil. The Swiss private banking industry will be in overdrive to engineer counter measures to ensure the looking glass is adequately opaque. And banking secrecy isn't the only factor in where you park your money. Putting it in a politically stable safe haven with investor protection and a rule of law are also big factors in safeguarding your wealth. Putting it in a banana republic might provide more secrecy but it doesn't mean you could sleep easy at night. On the IRS side, better the devil you know. They've got UBS by the short and curlies and have won some concessions (how much isn't yet clear). Better that than have the wealth they're targeting driven deeper underground to a place where they have no influence. So despite all the hype on both sides, there's a whiff of compromise and pragmatism about this "negotiated settlement". Because that's what it is.

well, now in hindsight UBS might have been better off exiting the US market (pressure had been building up behind the curtains over an extended period of time). At least if they had no assets in the US, the US government could not force them to do anything....

On the other hand, I think what's slowly coming to the surface here is just the ugly thruth behind the Swiss private banking system.... virtually all private banks do actively help the clients evade taxes. Also the credit card trick that was mentioned in the news is something all banks here do.