Swiss banking regulators warned financial institutions in the country that they need to overhaul their services yesterday to prevent another legal battle with the IRS. According to the Wall Street Journal, the regulators suggested banks limit the risk of being pursued by U.S. authorities like USB was earlier this year.
"In its capacity as supervisor, Finma expects institutions to take due account of foreign supervisory legislation in particular, and to define a service model appropriate for each individual target market," Finma said in a statement.
The cost of doing business—both monetary and in reputation—with wealthy foreigners has risen considerably since the U.S. and European Union member states began piling pressure on Switzerland, eager to get at tax income from undeclared funds held in Swiss banks.
The highest-profile case is UBS, which was pursued by U.S. authorities in the criminal as well as civil courts over hidden Swiss accounts. UBS ultimately admitted wrongdoing, paid $780 million to defer criminal prosecution, and handed over thousands of sets of data on clients to set aside the litigation. The U.S. is expected to set aside the civil court case shortly.
The UBS case has wide implications for other Swiss banks, many of which have traditionally dealt with assets of foreign clients, some of it undeclared, according to private bankers.
Last year, Switzerland ceded some ground, finally bringing it in line with standards laid out by the Organization for Economic Cooperation and Development. For example, it now helps foreign nations pursue tax evaders as well as outright cheats.
