Julius Bär clients targeted in US tax probe

American clients of private bank Julius Bär were told recently that they are the focus of a US tax evasion probe, a Zurich-based daily reported on Tuesday.

Julius Bär clients targeted in US tax probe
Photo: Sporst

US tax authorities had requested administrative assistance from their Swiss counterparts to investigate a number of US citizens suspected of having undeclared funds at the Zurich-based bank, the Neue Zürcher Zeitung (NZZ) reported.
"We confirm the receipt of a request for information from the Federal Tax 
Administration in Switzerland based on the effective double taxation agreement between Switzerland and the US," a bank spokeswoman told AFP in an email.
"We are currently working on the request from the Swiss authority," she 
added, declining to say how many of its clients had been targeted.
NZZ however reported that the request concerned some 100 clients and 
covered their activity from 2002 to 2012.
The request is the third from US tax authorities to a Swiss bank, after UBS 
and Credit Suisse recently received similar requests, the paper said.
Washington has repeatedly accused Swiss banks of complicity in tax evasion 
since they hold billions of dollars belonging to American citizens, who have taken advantage of Switzerland's long-cherished bank secrecy laws to avoid declaring their holdings to US tax authorities.
The United States has launched investigations into the dealings of around a 
dozen Swiss banks, including Julius Bär, prompting Switzerland to try to reach an overarching settlement with Washington to provide legal closure for its financial sector.
Swiss Finance Minister Eveline Widmer-Schlumpf told Swiss public radio 
earlier this month that a deal with the Americans was in sight, but did not provide any details.
The NZZ, however, reported that sources familiar with the talks recommended 
Swiss banks that have managed US citizens' undeclared funds to brace for massive fines.
The head of Credit Suisse, Switzerland's second largest bank, meanwhile 
told NZZ that he hoped for a rapid solution to the stand-off, even if it was a painful one.
"A painful solution is better than no solution," Urs Rohner told the paper, 
insisting that the deal should cover all the banks.
"It is unrealistic to think that the banks can continue skirting the 
problem in the long term, and that it will just solve itself," he added.
Switzerland has come under increasing pressure to end its bank secrecy 
practices, as crisis-struck countries press the Alpine nation to reveal details of their citizens who place their assets in the country.

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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.