UBS can challenge client data handover to France

UBS has criticised Swiss assistance of the French tax probe Keystone

A court has given UBS the legal right to challenge the handover of sensitive client data by the Swiss tax authorities to France. The bank is under investigation by French prosecutors for alleged tax evasion offences.

This content was published on October 26, 2016

The Federal Administrative Court on Wednesday granted UBS “party status” to the proposed data transfer after Switzerland green lighted a French request for administrative assistance issued in May. France has demanded a “five-digit” amount of client numbers from UBS, which it had received from the German authorities.

The court statement did not say whether the information given to the France was data stolen from the bank and sold to German agencies. Several CDs of stolen Swiss bank data have been bought by German states – some of which have been shared with other countries.

Party status gives UBS the right to see all files the Swiss tax administration intends to give to France and to fight its decisions. Banks do not usually play such an active role, but must simply do as they are told by the Federal Tax Administration (FTA).

The administrative court gave three “special circumstances” for deeming that UBS is “directly affected and therefore has its own interest in having the FTA decisions cancelled”.

“First, the compilation of the requested five-digit number of data sets creates an incomparably high workload to UBS,” the court said in a press statement. “Second, the unusually high number of clients concerned by the request for administrative assistance could leave one with the impression that UBS systematically helped clients to evade taxes.”

“Finally, there could also be the possibility that the data might be used in criminal proceedings already launched against UBS in France.”

The court decision does not give UBS the right to challenge the FTA’s decision to grant France administrative assistance, but it can contest which files can be handed over. The verdict could be subject to appeal at the Swiss Federal Court.

"We are pleased with the court's decision. This is an important first step in achieving legal clarity also for our clients and the financial centre," UBS said in a written statement.

The bank has strenuously opposed the FTA’s decision to cooperate with France, saying in July that “the legal grounds for this request are ambiguous at best”.

Shortly afterwards, UBS chief executive told the SonntagsZeitung and Le Matin Dimanche newspapers: “We can’t be obliged to hand over data according to an agreement with France. 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.”

UBS was placed under formal investigation in France in 2014. It had previously been fined $780 million (CHF776 million) in the United States in 2009 for aiding and abetting tax cheats. 

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