Swiss government: Illegal to transfer client information to US govt

Geneva - Swiss banks are not allowed to transfer client information to United States authorities, the government in Bern said in a statement on Wednesday. Switzerland filed its position Tuesday with a court in Miami, Florida, in response to US authorities stating last month that troubled banking giant UBS would not have to expect a criminal proceeding if it handed over the information. 'In a brief response, Switzerland makes it perfectly clear that Swiss law prohibits UBS from complying with a possible order by the court in Miami to hand over the client information,' the government statement said. 'UBS will by no means be in a position to comply with such an order ... (and) all the necessary measures should be taken to prevent UBS from handing over the information on the 52,000 account holders demanded in the US civil proceeding,' the statement read. UBS, finding itself stuck between the proverbial rock and a hard place, has been engaged for a year in legal proceedings in the US in relation to illegal activities its employees conducted there which aided tax fraud. The bank handed over information on 250 clients in February, saying they had committed fraud, a crime which is not covered by Swiss banking confidentiality laws. Tax evasion allegations, on the other hand, do not entitle the lifting of the secrecy rules. UBS also agreed to pay a fine of 780 million dollars. The US authorities, however, continue to demand information on 52,000 clients. The Swiss say that as Washington has no proof of any wrongdoing, or the names of the account holders, releasing the data would violate banking secrecy laws. Switzerland is in the process of relaxing its banking privacy regulations in regards to foreign governments by rewriting double taxation agreements with numerous capitals, including Washington. Bern has said the new deals would still prohibit 'fishing expeditions,' or times when information is demanded without solid information against a specific client. Swiss ministers have been trying to connect the double taxation deals to the case against UBS, hoping to end the litigation in return for long-term compliance with Organization for Economic Cooperation and Development tax fraud regulations. Swiss Economics Minister Doris Leuthard, on a visit to the US, called for a settlement to the UBS case, saying she did not want a drawn-out court case. The Swiss government holds a minority stake in UBS after a bailout last year.