Court rejects Swiss bank employee’s privacy suit

A Swiss court on Tuesday rejected a lawsuit against Bern for allowing the names of 1,100 employees and former employees of the HSBC bank to be handed over to US tax authorities, the ATS news agency reported.

Court rejects Swiss bank employee's privacy suit
Photo: AFP

Last April, the Swiss government gave 11 Swiss banks the go-ahead to accommodate a US tax evasion probe and hand over the names of thousands of their staff and consultants working with American clients.
Fearful of harsh US penalties and prosecution, the banks then met Washington's demands, handing over personal information about staff, and reportedly also making personal documents, emails and details of telephone calls available.
Charging that the move had sullied his reputation and forced him to live as an outcast who could no longer travel outside Switzerland for fear of being extradited to the United States, a former HSBC executive, whose name has not been revealed, filed a lawsuit against the bank, the Swiss government and Swiss financial regulator FINMA.
Swiss prosecutors had already rejected trying the case, but the man took it to the country's highest criminal court, which on Tuesday buried it for good, ATS reported.
The supreme court ruled that there had been no violation of Swiss banking laws, and deemed that the former HSBC employee had failed to prove he had suffered any damages.
The man had produced "no element proving his allegation that he can no longer leave Switzerland," and "nothing in this case makes it possible, for instance, to conclude that he is the subject of prosecution in the United States," it said in its ruling, according to ATS.
The court also found there was no proof that the transfer of information had breached Switzerland's cherished bank secrecy practices, which have come increasingly under international pressure.
Douglas Hornung, the defence attorney in the case, harshly criticised the ruling, telling ATS it "sanctions the total absence of any protection of bank employees . . .  who see their information sent to foreign prosecutors and risk criminal prosecution even though they have never done anything beyond their jobs, in strict conformity with Swiss law."
Hornung, who is defending around 40 employees and former employees of HSBC, Credit Suisse and Julius Bär, insisted the fight was not finished, pointing
out that he still had similar cases pending before civil courts in several Swiss cantons.

Tuesday's court ruling came as Switzerland inches closer to closing a controversial deal with the Washington, the US Foreign Account Tax Compliance Act (FATCA) that starting next year will require Swiss banks to report the holdings of their US clients to US tax authorities.

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Switzerland’s banks remain among the world’s most secretive

Despite the progress made over the years, the Swiss financial sector continues to be one of the least transparent in the world. But there is good news too.

Switzerland’s banks remain among the world’s most secretive
Switzerland remains one of the world's least transparent nations. Photo AFP

Switzerland is in the third place in the 2020 Financial Secrecy Index released by the non-governmental organisation (NGO) Tax Justice Network (TJN), which rates 133 nations based on their financial transparency.

Two other European countries, Luxembourg and the Netherlands, are also ranked among the top 10 least transparent nations on the TJN’s list.

Despite being in the third place, Switzerland ranks better this year than it did in the previous edition of the Index, which is released every two years — it slipped from the first to third place. The Cayman Islands and the United States took the first and second spots, respectively.

Switzerland reduced its risk of being an offshore haven for tax cheats by 12 percent, “finally improving enough to move off the top of the index”, TJN said. 

READ MORE: Switzerland's strangest taxes – and what happens if you don't pay them

This improvement is mainly due to Switzerland extending its international network for the automatic exchange of customer information to more than 100 countries. 

Also, in a referendum held last year, Swiss voters accepted the Federal Act on Tax Reform and AVS Financing (TRAF). This legislation introduced major changes in the Swiss tax system by ending some preferential tax schemes and replacing them with new regulations which are in line with international standards.

This tax reform prompted the European Union to change Switzerland's status from ‘tax haven' to one which is EU-compliant, removing strict controls on transactions within the EU. 

So why, despite all the reforms, does Switzerland still rank among the world’s least transparent nations?

According to a Swiss NGO Alliance Sud, wealthy people from poor countries can still hide their money here from the tax authorities of their home nations.

Alliance Sud noted that despite the progress made in the past years by Swiss financial institutions, “the fight against tax evasion remains insufficient”.

Switzerland is the world’s biggest centre for managing offshore wealth, with a quarter of global assets invested here.

For years, it has been placed on various lists of tax havens where wealthy foreigners could park their money. Faced with widespread criticism for this practice, Switzerland passed an anti-money laundering law in 1997 and introduced strict regulations against tax evasion.