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SPBA Slams Switzerland's 'Back Door' FATCA Plans

Monday, 27 May 2013   (0 Comments)
Posted by: Author: Ulrika Lomas
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Source: Ulrika Lomas (, Brussels)

The Swiss Private Bankers Association (SPBA) has highlighted its objections to certain aspects of the Swiss Federal Council's bill, implementing the revised Foreign Account Tax Compliance Act (FATCA) recommendations, notably the definition of a punishable tax crime as a predicate to money laundering.

While supporting in principle a policy of tax conformity, as well as plans to implement FATCA, the international standard in the fight against money laundering, the SPBA nevertheless warns that Switzerland must not profit from this legislative revision to introduce, "by the back door," internal legislative reforms that are simply not required under the US FATCA legislation.

The SPBA opposes plans to extend the concept of tax fraud. Currently, this infraction arises from the use of false or falsified documentation. The Federal Council intends to unnecessarily extend the definition to include cases of "artful deception," the SPBA notes. Given that this concept is "very vague," applying the measure will pose unsolvable practical problems for the banks, the association argues, making clear that banks simply do not have the means with which to detect such indications, in particular in the case of foreign clients.

Furthermore, for Swiss clients, introducing the concept of "artful deception," which could lead to a prison sentence of three years or more, would "profoundly modify relations between the citizen and the state," the SPBA stresses.

Finally, the Federal Council also aims to introduce the term "qualified tax fraud," the SPBA explains, pointing out that this offence constitutes a crime, punishable with a prison sentence of five years, as well constituting a predicate offence to money laundering. The SPBA laments the fact that the only qualifying element currently proposed by the Federal Council is the presence of undeclared taxable assets in excess of CHF600,000 (USD624,035). According to the SPBA, it is simply not "appropriate" to base the crime of qualified tax fraud merely on the taxable base, in view of the fact that this is arbitrary, and given the large disparities between the Swiss cantons in terms of the tax rates applied. The SPBA therefore advocates instead that the amount of tax evaded should be used as a qualifying element.



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