HSBC client data to be handed to US

The HSBC branch in Geneva has been the target of several inquiries related to tax evasion, particularly in relation to data leaked by one of its former employees, whistleblower Hervé Falciani Keystone

Switzerland is poised to hand sensitive client data from HSBC’s Geneva-based private bank to United States tax fraud investigators. The move comes in response to a US request for administrative assistance that was lodged in April. 

The Swiss Federal Tax Administration on Tuesday confirmed a report by Reuters that HSBC Switzerland had handed over the files, which could be sent on to the US Internal Revenue Service (IRS). No details were given about the number of clients affected or the amount of assets concerned. 

“Following an information request in April 2016 from US authorities to the Swiss Federal Tax Administration (SFTA), the bank has provided certain files, mostly related to former clients, to the SFTA,” HSBC Switzerland spokeswoman Lonnie Frisby told Reuters. “The Swiss authorities may forward part or all of this information to US authorities in accordance with applicable laws and treaties. Anyone subject to this request has been notified.” 

Affected HSBC clients have 30 days to appeal having their details sent to the US following the SFTA’s announcement of its plan. 

From UBS to HSBC 

The Geneva private banking arm of the British institution has been at the centre of a long-running international tax probe after former employee Hervé Falciani leaked data to France. These details of client accounts have been passed around the world, resulting in criminal probes in several countries. 

This is not the first time that Switzerland, once famed for its impenetrable banking secrecy laws, has handed over bank data to other countries. In 2009, the financial regulator passed on hundreds of UBS bank client details to the US – a move that was later condemned by the Swiss courts. 

The following year, Switzerland’s parliament set a gold seal legal standard by approving the transfer of details of some 4,450 UBS clients to the US. 

Since then, many other banks have either been ordered or allowed to hand over bank data – mainly to the US – in an effort to prevent banks from facing criminal prosecutions. 

Too far?

Earlier this month, UBS chief executive Sergio Ermotti said things had gone too far. In interviews with both the SonntagsZeitung and Le Matin Dimanche newspapers, Ermotti condemned a government order to hand over data to French prosecutors. 

“We need a coherent approach about our past policy. This will pave the way for a new offensive against Swiss banks,” he said. 

“We can’t be obliged to hand over data according to an agreement with France,” he added. “We want to ascertain that our client stand a fair chance to defend themselves before any information is passed on. Also we want legal security.” 

Despite continued problems sorting out past banking misdemeanors, Switzerland is poised to enter a new era of enhanced transparency. From 2018, Switzerland will automatically exchange tax information with certain partner countries.