Swiss sign up to give details of foreign accounts in break with bank privacy code

By Vanessa Houlder in London

Switzerland, the world’s largest offshore financial centre, has pledged to automatically hand back the details of foreign accounts to other countries in one of the most significant breakthroughs in the global crackdown on tax evasion.

At a meeting of European finance ministers in Paris yesterday, Switzerland agreed to sign up to a new global standard on automatic information exchange in a decisive break with its centuries-old commitment to protecting the privacy of banking clients.

The move is a big step forward for governments that have mounted a concerted attack on evasion in the wake of the global financial crisis and a series of tax scandals.

Swiss co-operation is pivotal to the struggle to prise open taxpayers’ hidden accounts because of its long tradition of bank secrecy and its dominant wealth management sector, which has $2.2tn of offshore assets.

The declaration, signed at the Organisation for Economic Co-operation and Development in Paris, requires countries to collect and exchange information on bank accounts, the beneficial ownership of companies and other legal structures, such as trusts. The Swiss government said the agreement underscored its commitment to tackling tax fraud and evasion.

The Swiss Bankers Association said: “The banks in Switzerland are willing to adopt the automatic exchange of information along with other financial centres, provided that the exchanged information is only applied for tax purposes.”

Switzerland is joining at least 44 nations in signing the agreement, which includes other OECD members, the G20 group of leading countries and offshore centres such as the Cayman Islands and Jersey. The global standard has been developed by the OECD and endorsed by the G20.

The remaining offshore centres are expected to come under pressure to co-operate. A blacklist of countries that do not sign up to transparency measures is likely to be drawn up by the OECD this year.

Some offshore account holders are believed to have moved their money to the handful of centres, such as Panama and Dubai, that have resisted the transparency drive.

European governments expect billions of euros to be repatriated as a result of the crackdown. Governments are considering offering reduced penalties to evaders to “solve the past”. (FT)