Bank data transfer blocked for stolen Falciani files

Hervé Falciani has been sentenced to five years imprisonment for stealing the HSBC files Keystone

Switzerland may not give the stolen banking details of a married couple to French tax evasion investigators, a court has ruled. Their data was among a large number of HSBC files illegally leaked to France by whistleblower Hervé Falciani in 2008.

Acting on the information, France had asked Switzerland to provide further details on accounts at the Swiss HSBC branch, under the terms of a bilateral treaty. The unnamed couple challenged the handover, winning a Swiss court case in 2015.

On Wednesday, the Federal Supreme Court confirmed this ruling, saying that administrative assistance from the Swiss authorities could not be granted if the data was obtained by breaking Swiss laws.

In a separate ruling last month, the Supreme Court made a legal distinction between data that had been stolen in Switzerland or abroad. It said that stolen UBS data could be passed to France because the theft had taken place in that country – thus not specifically breaking Swiss laws.

The HSBC case was an international sensation when news of the theft broke. IT worker Falciani stole the data, containing more than 100,000 client names, from his former employer, HSBC private bank in Geneva, and attempted to sell them to several foreign governments. He eventually gave the files to then French finance minister Christine Lagarde – after which they were dubbed the “Lagarde list”.

Falciani fled to Spain and then France, where he is protected from extradition by his French citizenship. Last year, he was sentenced in absentia by a Swiss court to a five-year jail term for breaking Swiss banking secrecy laws and economic espionage.

Falciani said the verdict was politically motivated and has refused to enter Switzerland to serve his term.

Stolen bank data issue

The issue of stolen bank data has dogged Switzerland for a number of years. The Lagarde list was passed onto several other countries, some of which have opened criminal probes. Other CDs containing stolen bank files have been sold to German states, where they have been offered to other countries.

Switzerland’s refusal to give legal assistance to India based on the Lagarde list led to a cooling of relations between the two countries. Switzerland solved the impasse by agreeing to assist on the basis of stolen data if India found additional evidence from elsewhere to back up their suspicions of tax evasion.

Last year, the Organisation for Economic Cooperation and Development’s (OECD) Global Forum unit awarded Switzerland a “largely compliant” status when reviewing the country’s record on assisting tax evasion probes. One negative mark was Switzerland’s refusal to help out on the basis of stolen data.

The Swiss government has tried on two occasions to change the law to allow administrative assistance for stolen data, but the suggestion has yet to receive parliamentary approval.

In future, the issue should become less of a problem because Switzerland has signed up to the global automatic exchange of tax information. Having signed bilateral deals with several countries, including the European Union, Swiss banks will from 2018 automatically start informing foreign tax authorities of their citizens’ Swiss banking activities.