Britain launches new broadside over banking secrecy

Dawn Primarolo denied Britain was undermining Switzerland's position as a financial centre.

A high-ranking British official has taken Switzerland to task over banking secrecy.

This content was published on December 13, 2001 minutes

The number three in the British finance ministry, Dawn Primarolo, said Swiss banking confidentiality was allowing UK citizens to avoid paying taxes on assets held in Switzerland.

The Swiss Bankers Association rejected her claims made in a speech to the British-Swiss Chamber of Commerce.

"I think there's a danger that you get the impression that Switzerland is not prepared to cooperate at all with the European Union in taxing its citizens which is absolutely false," James Nason, a Swiss Bankers Association spokesman told swissinfo. "The Swiss government has said that it is ready to work towards a solution with the EU and has made a very good offer."

Primarolo's comments follow a suggestion by the British finance minister, Gordon Brown, that terrorists might have laundered funds through Switzerland.

Primarolo, who is Britain's paymaster general, said Switzerland needed to accept that banking secrecy was in direct contradiction to the growing culture of openness and transparency being demanded by investors and regulators, particularly in the wake of the September 11 attacks.

Undermine Swiss finance centre

"I think other financial centres are jealous of Switzerland's success," Nason told swissinfo.

"Switzerland has an enormous slice of the asset management market for overseas clients and our conviction is that they don't just bring their funds to Switzerland to enjoy the high level of confidentiality offered by Swiss banks. There are a whole load of other pulling factors including the political and monetary stability to be found here," Nason continued.

Primarolo denied that Britain was trying to undermine Switzerland's leading position as a financial centre, and said her only aim was "to ensure that British taxpayers pay the right amount of tax, at the right time and in the right place".

"We need to achieve the right balance between providing the relevant information about our tax payers, without compromising the confidentiality, which is clearly important here in Switzerland and everywhere else," she told swissinfo.

Primarolo praised the Swiss banking system for its quality and service and said the country should not compromise its reputation by standing in the way of other countries' efforts to tax their citizens.

"Those qualities are very envied around the world and the question of assisting other tax authorities should not compromise those enviable qualities that are here in the Swiss financial sector," she told swissinfo.

Primarolo's comments come amid increasing European Union pressure on Switzerland to relax banking secrecy.

Switzerland has repeatedly said banking secrecy is not negotiable. Instead, Bern has proposed introducing a withholding tax on interest on assets in accounts held by EU citizens in Swiss banks.

EU delays tax decision

The EU decided on Thursday evening to delay a decision on how to tax savings accounts held by its citizens in Swiss banks. The finance and economics ministers announced they would take a final decision by December 31 2002 after studying the situation in non-member states, such as Switzerland, futher.

While the 15-member countries debated the issue, the Swiss economics minister, Pascal Couchepin, reiterated Bern's unwillingness to exchange information with Brussels on EU account holders in Switzerland.


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