It’s official – Switzerland has finally rolled over and become a legitimate financial centre after years of aiding tax evasion.
The conformation comes from no less than the Federal Authorities of the Swiss Confederation – the highest echelon of Swiss government.
The confederation has posted a message online stating the Alpine nation will bow to the US Foreign Account Taxation Compliance Act (FATCA) from July 2014.
Swiss banks have been dragged shouting and screaming to agreeing to sign up to FATCA after intense pressure from other governments.
The US, Britain, France, Germany and Austria have applied the pressure over the past three years.
Years of Pressure
The US has arrested Swiss bankers and prosecuted banks for aiding billions of dollars of tax evasion by American citizens.
The oldest Swiss private bank was forced to close after collecting fines of millions of dollars.
Recently, the US Treasury promised the next banks in the prosecutor’s sites were global giants Credit Suisse and Julian Baer.
Meanwhile, the British, French and Germans have paid off whistle blowers to hand over lists of account holders at the Swiss branches of HSBC.
Britain has also agreed a tax penalty with Swiss banks which is scheduled to hand over £3 billion in ‘lost’ tax – although detractors suggest the agreement will give a much lesser return.
Under FATCA, the Swiss authorities will automatically hand over details of American customers and their finances for accounts holding more than $50,000.
Beirut Bank Takes FATCA Option
Even if the account holders shift their assets to a more tax secretive destination, they are fast running out of choices as so-called tax havens around the world join FATCA and promise to come clean over financial affairs under their jurisdiction.
Financiers predict Singapore will overtake Switzerland as the wealth manager of choice by 2020 as the world economy shifts east to the Asia Pacific, leaving Swiss banks and fund managers scratching around to find other ways to compete in a tax transparent global economy.
Meanwhile, signs are banks in the Middle East and North Africa (MENA) are starting to succumb to FATCA.
The latest is the Bank of Beirut, Lebanon, which has announced heavy investment in FATCA compliant technology.
“To take part in the global economy, financial institutions must take part in FATCA,” said a spokesman.
The bank is the first Lebanese institution to acknowledge FATCA and is expected to lead a flood of MENA financial institutions that will take unilateral action to comply with FATCA even if their government is failing to sign an agreement with the US.