Fri, Nov 03, 2017 - Page 9 News List

Swiss prosecutors seek widening of secrecy law to those abroad

EU lawmakers are worried that the move might deter whistle-blowers from supplying information on people who shift their wealth to accounts protected by secrecy laws

Reuters, ZURICH, Switzerland, and LONDON

Swiss prosecutors are seeking a court ruling that would make it easier to convict whistle-blowers for breaking the nation’s bank secrecy law wherever they are in the world, legal documents showed.

The Swiss Banking Act requires employees of Swiss-regulated banks to keep client information confidential, but a number of staff have leaked account details to foreign authorities in the past decade as Western governments crack down on tax evasion.

In the unpublished documents reviewed by Reuters, Zurich prosecutors have asked the nation’s highest court to interpret the law so that the secrecy obligation is widened to include people with looser working relationships to Swiss banks and their subsidiaries abroad.

The documents, dated Nov. 21 last year, form the basis for an appeal by prosecutors to the Swiss Federal Supreme Court against the acquittal last year of former private banker Rudolf Elmer on charges brought under the secrecy law.

Elmer, who headed the Cayman Islands office of Swiss private bank Julius Baer until he was dismissed in 2002, later sent documents revealing alleged tax evasion to the anti-secrecy group WikiLeaks and to tax authorities across the globe.

Zurich’s upper court ruled last year that the bank secrecy law did not apply to him as an employee of the Caribbean subsidiary, rather than of the parent bank in Zurich.

In their appeal, prosecutors argue that if they cannot apply the law to people connected to Swiss banks outside the nation it deprives banking secrecy of its substance “with far-reaching consequences that cannot be accepted.”

Under Swiss law, no public hearing will be held, but the documents show the Swiss Federal Supreme Court is considering the written appeal.

On June 9, it invited Elmer’s side to make a written response, which his lawyer has since submitted. The court is expected to issue a written judgement next year.

A spokeswoman for Zurich’s senior prosecutors declined to comment beyond noting: “It’s up to the supreme court to decide on open questions.”

Julius Baer also declined to comment.

Elmer was arrested twice in Switzerland, in 2005 and 2011, and spent more than seven months in investigative custody.

“I was defamed, criminalized and isolated,” Elmer said, adding that prosecutors were trying to set an example of what could happen to people who speak out and to their families.

“The law in this case has been bent, stretched and, most importantly, abused by the judicial system of Zurich in order to protect its money-making machine,” he said.

Switzerland is the world’s largest center for overseas wealth management and has had to respond to international pressure, especially from the EU and US, for greater transparency.

That includes participation in the Automatic Exchange of Information program, an agreement among developed economies which aims to ensure that an offshore account is known to tax authorities in the account holder’s nation of residence.

If the appeal is successful, the ruling would have no legal basis in most nations as they have no bank secrecy rules, so Switzerland could not extradite people from the likes of Britain or the US on such charges, but accused people would be vulnerable to arrest if they entered Switzerland or could face the stigma of being charged with a crime in their absence.

Some EU lawmakers are worried that the prosecutors’ move, if successful, might deter potential whistle-blowers from supplying information on people accused of shifting their wealth to tax havens through accounts protected by secrecy laws.

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