Swiss prosecutors seek widening of secrecy law to bankers abroad

Swiss whistleblower Rudolf Elmer in 2011 Keystone

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In the unpublished documents reviewed by Reuters, Zurich prosecutors have asked the country’s highest court to interpret the law so that the secrecy obligation is widened to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 November 21, 2016, form the basis for an appeal by the prosecutors to the Federal Supreme Court against the acquittal last year of former private banker Rudolf Elmer on charges brought under the secrecy law. 

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 Swiss law, no public hearing will be held but the documents show the Supreme Court is considering the written appeal. On June 9, it invited 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. 

External pressure 

Switzerland is the world’s largest centre for overseas wealth management and in recent years has responded to international pressure, especially from the European Union and United States, for greater transparency. 

This includes participation in the Automatic Exchange of Information programme, 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 United States 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. 

Deterrent concerns 

Some lawmakers in the EU are worried that the prosecutors’ move, if successful, may deter potential whistleblowers from supplying information on people accused of shifting their wealth to tax havens through accounts protected by secrecy laws. 

One European lawmaker expressed concern over the lack of protection for whistleblowers in Switzerland, saying the aggressive prosecution of Elmer and others confirmed the country had not really changed its ways regarding tax crimes and money laundering. 

Swiss banks employ large numbers of people in London, as well as New York, and a British politician said employees of bodies under British jurisdiction could not be subject to an extraterritorial law. 

“This would be unacceptable,” John Mann, a Labour Party member of parliament’s Treasury Select Committee, told Reuters. “We need a position whereby people feel confident to whistleblow wherever they are based. There’s a danger this could have ramifications for the Swiss banks in Britain.”