Switzerland aims to clamp down on foreigners' use of its banks to skirt paying taxes at home, which has soured relations with its neighbours and trading partners, the government said on Friday.

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In a statement, the government said it was "stepping up its efforts to combat abuses in the area of money laundering and taxation."

It called on the finance ministry to quickly draw up a proposal for a new law that would criminalize serious tax evasion on an equal footing with money laundering.

That move, which is in line with recommendations from the international Financial Action Task Force on Money Laundering (FATF), would mark the first true criminalization of tax evasion in Switzerland.

The bill would be aimed at preventing banks and other financial institutions from accepting untaxed assets, the government said, stressing that they would be required to do more to determine if their foreign clients were dodging taxes.

"The extent of the examination depends on the risk posed by the contracting party, which is similar to the due diligence requirements for combating money laundering and terrorist financing," it said.
   
But while banks would be permitted to ask their clients to hand over self-declarations attesting that they had paid the appropriate taxes, the government stressed there would be no obligation for clients to file them.

Left-wing Swiss parties have called for all bank clients to be forced to file such declarations, but the government said setting up such a system would be too complicated.

It preferred, it said, to allow the banks to "self-regulate", since this had proven effective when it came to sniffing out money launderers.

Faced with mounting international criticism that its banking practices enable wide-scale tax evasion in other countries, Switzerland is trying to tidy house at the same time as it attempts to hammer out bilateral tax deals with several countries.