Swiss Bank Group Opposes Draft Bill on Due Diligence of Clients

The Swiss Bankers Association said it opposes a draft bill to extend lenders’ due-diligence requirements as the rules may overlap with a system of information sharing on suspected tax dodgers proposed by the European Union.

The Swiss government’s bill requiring banks to increase scrutiny of clients’ tax affairs, published in draft in February along separate proposals to strengthen anti-money laundering rules, may prove unnecessary if Switzerland adopts the EU’s automatic exchange of information standard, the association said today in an e-mailed statement.

Switzerland, the world’s largest center for cross-border wealth with $2.2 trillion of non-resident personal financial assets, is trying to shed its image as a haven for undeclared funds amid a crackdown on tax evasion by the U.S. and European governments. While the Swiss government wants to strengthen anti-money laundering rules in line with recommendations by the international Financial Action Task Force and to implement its own “clean-money strategy,” the SBA said today the bill would impose “additional, costly measures” on banks.

“In a world of automatic exchange of information, it would be the responsibility of tax authorities to go through the data and decide whether someone has paid their taxes,” said Thomas Sutter, a spokesman for the SBA in Basel. “It wouldn’t be up to the banks and therefore we wouldn’t need this additional due diligence the Swiss government has proposed.”

Fiscal Compliance

Enhanced due diligence includes a risk-based client assessment to stop banks accepting untaxed assets and procedures prompting banks to demand proof of fiscal compliance from clients suspected of tax evasion, according to a Feb. 27 statement by the government.

Switzerland is ready to discuss a system of automatic exchange of information between countries if the standard is recognized and introduced by other financial centers, Finance Minister Eveline Widmer-Schlumpf said on June 14.

The SBA, which represents 347 institutional members, said it “generally” supports Switzerland’s implementation of the FATF’s standards and banks should only acquire and manage taxed assets.

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