Switzerland 'wrong' to cooperate on stolen bank data

Swiss banks have been plagued by data theft in recent years.

The tax authorities violated Swiss law by offering France legal assistance in tracking down tax evaders using stolen UBS bank data. This was the verdict published by the Federal Administrative Court on Thursday.

This content was published on September 24, 2015

The court ruled in favour of a complainant whose name was among a number revealed to the French authorities in 2010 by a UBS employee who illegally dished out the data contrary to Swiss banking secrecy laws. The request for administrative assistance was sent by France in 2013 and was complied with in October 2014.

Because the data leak was punishable under Swiss law, the Federal Tax Administration (FTA) “was not permitted to grant administrative assistance”, the court ruled on September 15. The decision was made public on Thursday. The verdict could be appealed.

In an emailed statement to the FTA said it was "analysing" the court decision. The statement added that the tax office did not know that France's 2013 request for assistance was based on stolen data.

"The FTA only provides information if the request is not based on stolen data. That has always been the case," spokesman Patrick Teuscher wrote.  "In the process, the requesting state must credibly demonstrate that the request is not based on stolen data."

This leaves open the possibility that the FTA was in some way hoodwinked by the French request.

Law change?

The Swiss government made its second attempt earlier this month to have the law changed to allow legal assistance even if bank data is stolen. The cabinet proposal was went out for consultation until December, after which parliament could vote on the issue and later possibly face a referendum.

It is unlikely that the proposed law amendment would come into force before 2017 even if it passes all these tests. A previous government proposal along the same lines was shot down in the consultation phase in 2013.

In recent years the Swiss financial centre has been plagued with the theft and sale of sensitive data. Switzerland has steadfastly refused to offer help to countries, such as India, that base requests on information received from such thefts.

But since then, the Organisation for Economic Cooperation and Development’s Global Forum on Exchange of Information for Tax Purposes has put pressure on Switzerland to change its stolen data stance.

Allowing the use of stolen data in administrative assistance requests is now seen as an important precondition of passing the Global Forum’s latest scrutiny of Switzerland’s tax compliance.

Switzerland has already agreed in principle to the automatic exchange of tax information to other countries by the start of 2018. Parliament is currently debating this issue.

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