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Bank secrecy in Switzerland remains in effect

Swiss parliamentSwiss Parliament rejected the government’s proposal on a settlement with tax authorities in the United States that would allow Swiss banks to ignore the Swiss laws on banking secrecy about American clients suspected of tax evasion. Swiss banks have avoided the risk of being the subject of criminal investigations in the U.S. on facilitating tax evasion.

Swiss Parliament lower house rejected the draft law by 126 votes against. 67 MPs voted for. The proposal would allow Swiss banks to hand information to U.S. authorities about American clients. The upper house of Parliament endorsed the proposal by 26 votes to 18 against. The draft law, proposed by the government last month, called by critics a violation of Swiss sovereignty, will be sent back to the upper house.

If the proposal were approved, Swiss banks would have started to send U.S. authorities information on wealth hidden in Swiss accounts of Americans who hope to avoid paying taxes. In the lower house of Parliament, several politicians criticized aggressiveness with which U.S. authorities try to impose their views, without any consideration to the legal risks facing the Swiss banks and their employees. MPs were unhappy by the absence of details on possible financial sanctions that would be imposed on the Swiss banks concerned. The government presented the plan in May and recommended that Parliament act immediately.

WEGELIN & Co., One of the oldest and most prestigious Swiss banks, was indicted in the U.S. in February 2012 for helping people and companies in the United States to hide wealth worth over $1.2 billion. The Swiss bank sold immediately most of its operations to a competitor to safeguard most of its business, and kept only activities with U.S. customers, disrupting normal business practice.

UBS, the largest Swiss bank, was penalized in the U.S with a $780 million fine for similar irregularities.

Switzerland was the largest offshore financial center in the world with $2,200 billion in local bank accounts at the end of last year, according to Boston Consulting Group.

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