The end of UBS tax investigation epopee, Swiss banking secrecy remains intact

The United States and Switzerland have come to consensus over UBS case. The preliminary agreement involves the disclosure of about 5,000 holders of secret Swiss accounts as reported by the weekly newspaper NZZ am Sonntag. Another Swiss paper Sonntag, said around 4,500 names would be handed over. Meantime, UBS won’t have to pay a fine. The sources familiar with the situation say that the deal will likely be signed this week.

The deal will become a landmark in the long running dispute between the US authorities and UBS putting an end to the disastrous investigation that injured the bank’s reputation and revenue. On the other hand the deal won’t violate bank secrecy laws of Switzerland. As reported by NZZ am Sonntag the deal would be based on the existing U.S.-Swiss double taxation agreement of 1996, and therefore not require any changes to Swiss law. Thereby, the Swiss cabinet will be able to implement the deal directly, without going through parliament.

Under the terms of the double taxation agreement, which obliges Switzerland to provide help if Washington seeks it in a criminal investigation, the bank will disclose the names of those suspected of committing tax fraud. Accounts below the specified size won’t be disclosed but the clients also won’t be advised of the limit so as no one could be aware if his/her account is vulnerable. Meantime, those facing disclosure will be able to challenge the actions in the Swiss courts.