Swiss Banks Block Access to Offshore Accounts on Tax DealsJuly 06, 2011, 4:59 AM EDT
By Elena Logutenkova
(Updates with bankers group comment in 11th paragraph.)
July 6 (Bloomberg) -- Some Swiss banks are blocking clients from gaining full access to offshore accounts in connection with tax treaties being negotiated between Switzerland and Germany, the U.K. and the U.S., the Swiss banking ombudsman said.
“This is a new type of complaint we’re getting” this year, Hanspeter Haeni said by telephone yesterday, adding that he’s not allowed to disclose the names of the banks. “I’m afraid there will probably be more such cases.”
Total complaints this year from foreign clients about treatment by Swiss banks have already surpassed the 39 made for the whole of 2010. The 44 complaints received by the ombudsman’s office this year come mostly from customers with U.S. citizenship or a green card and from Germany, Haeni said.
Switzerland is in talks with Germany, the U.K. and the U.S. about resolving the issue of untaxed assets held in Swiss bank accounts. The countries are negotiating about proposed withholding taxes on interest, dividends, capital gains and investment income earned by clients with offshore bank accounts as well as levying a tax for past non-disclosure.
The number of complaints to the ombudsman has been rising since UBS AG, Switzerland’s biggest bank, agreed in 2009 to disclose data on more than 4,500 American clients suspected of tax evasion to the Internal Revenue Service. German authorities since last year have been investigating about 1,100 customers of Credit Suisse Group AG, the second-largest bank, after obtaining a disk with data on undeclared accounts.
The complaints filed with the ombudsman mostly relate to banks’ decisions to stop doing business with some clients or to charge them higher fees to make up for a more complex regulatory environment, Haeni said. In relation to banks’ blocking full access to the money, the ombudsman recommends customers to talk to the lenders directly.
“The answer to the question of whether banks are allowed to do that isn’t at all clear,” Haeni said. “The client needs to talk to the bank about possibilities to protect the interests of both parties.”
Spokesmen at UBS and Credit Suisse declined to comment on whether the banks are blocking any accounts. Julius Baer Group Ltd. and Wegelin & Co. also declined to comment.
“Blocking wealth assets without a cogent reason is not a business policy of Zuercher Kantonalbank,” spokesman Diego Wider said in an e-mailed statement.
The Swiss bankers association has recommended its members provide “no active assistance” to clients on getting their money out of the country before tax negotiations conclude, said spokeswoman Rebeca Garcia.
Under the withholding tax plan originally proposed by the association, revenue generated would go to treasuries in the U.K. and Germany while client identities would remain secret. Swiss banks are currently discussing how to divide a one-time payment to German and U.K. tax authorities, Garcia said yesterday.
Swiss banks, which manage about 27 percent of the world’s cross-border wealth, must take measures to “mitigate or eliminate risk” connected to their business with clients that are not resident in Switzerland, the Financial Markets Regulatory Authority said in a report last October. That may mean withdrawing services from certain markets or categories of clients, the Bern, Switzerland-based regulator said.
Haeni has been the banking ombudsman since September 1995, acting as an independent mediator between clients and banks based in Switzerland on specific complaints.
--With assistance from Carolyn Bandel in Zurich. Editors: Dylan Griffiths, Steve Bailey.
To contact the reporters on this story: Elena Logutenkova in Zurich at firstname.lastname@example.org
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