Swiss move to relax stolen bank data assistance

Stolen data from HSBC's private bank in Geneva found its way across the world Keystone

Switzerland is poised to give in to global pressure to assist foreign tax probes involving stolen bank data. However, proposed law changes would still outlaw administrative assistance to countries that directly buy information from whistleblowers.

This content was published on September 2, 2015 - 11:00

This significant policy shift was put to consultation on Wednesday and would still have to face parliamentary scrutiny before being put into force - most likely not before the start of 2017.

Until now Swiss lawmakers have staunchly opposed stolen data being used as the basis of administrative assistance for tax evasion probes being carried out by other countries. A similar government proposal in 2013 was shot down during the consultation phase.

In recent years, the Swiss financial centre has been rocked by a spate of data thefts, most notably by Hervé Falciani. The former HSBC Geneva employee sold sensitive client information to the French authorities and is due to face trial in Switzerland in October for breaching Swiss banking secrecy laws.

But growing international pressure has forced the issue back into the open. India, in particular, has been strongly critical of Switzerland’s refusal to offer assistance because its requests have been based on the stolen HSBC data that ended up in Indian hands.

Last year, the Swiss authorities cut a deal with India to allow the use of stolen data in some circumstances provided that it is backed up by other strong evidence of wrong-doing.

Under intense scrutiny

The Organisation for Economic Cooperation and Development’s (OECD) Global Forum on Exchange of Information for Tax Purposes has also put pressure on Switzerland to change its stance.

In March, the Global Forum said that Swiss laws had been sufficiently amended to allow it to pass onto phase 2 of the peer review process that tests the tax transparency of countries. Switzerland now faces intense scrutiny on how it assists foreign tax probes in practice – with the handling of stolen data requests coming under the microscope.

“This is a delicate and difficult topic, but if someone is on a list [of suspected tax cheats] they should not be immune from prosecution simply because the data has been stolen,” Pascal Saint-Amans, director of the OECD’s Centre for Tax Policy and Administration, told in March.

Under the new Swiss proposals, assistance could be given “if a foreign country has obtained the stolen data via normal administrative assistance channels or from public sources”, the Federal Council stated on Wednesday. “However, administrative assistance is still not possible if a country has actively acquired the stolen data outside of administrative assistance proceedings.”

In short, if a government or other foreign agency buys stolen data directly from the whistleblower then it would still be invalid as the basis of an administrative assistance request. But if that data is passed from one country to another via official channels - or has been gleaned from the media - then Switzerland would have to act.

The Swiss government believes that this concession should help it through the Global Forum peer review. The consultation process will last until December 2 and parliament is expected to debate the draft bill next summer.

Furthermore, international rules and guidelines governing the exchange of information have been more firmly defined since 2013, making the system less prone to abuse, according to the government press release.

“For instance, the exchange of information could be refused if it is incompatible with public policy, such as in the case of requests motivated by racist, political or religious persecution,” Wednesday’s statement read.

Switzerland is committed to the automatic exchange of tax data with selected other countries by the start of 2018.

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