Swiss seeks scope of secrecy laws widened

The nation is the world’s largest center for overseas wealth management

Zurich/London, Oct. 31: Swiss prosecutors are seeking a court ruling that would make it easier to convict whistleblowers for breaking the country’s bank secrecy law wherever they are in the world, legal documents show.

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In the unpublished documents reviewed by Reuters, Zurich prosecutors have asked the country’s highest court to interpret the law so that the secrecy obligation is widened to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 2016, form the basis for an appeal by the 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.

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

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

On June 9, 2017, it invited Mr Elmer’s side to make a written response, which his lawyer has since submitted. The court is expected to issue a written judgment 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.

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

“I was defamed, criminalised and isolated,” he told Reuters, adding that the 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 moneymaking machine.”

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

This includes participation in the Automatic Exchange of Information program, an agreement among developed economies which aims to ensure that offshore accounts are known to tax authorities in the account holders’ country of residence.

If the appeal is successful, the ruling would have no legal basis in most countries as they have no bank secrecy rules, so Switzerland could not extradite people from the likes of Britain or the US on such charges.

However, 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. —