Will Swiss banks freeze US accounts over tax evasion?

Five years ago, the massive fine of $780 million was placed on UBS, Switzerland’s biggest bank, for its role in helping American clients evade their taxes. Since then, the country’s private banking sector has been working on over drive to remedy the situation and avoid any such punishments in future. In the latest step to ensure compliance with the law, a number of Swiss banks have threatened to freeze American clients’ accounts unless they prove they are, or take steps to become, tax compliant.

The end of July is the deadline set for banks within the US Department of Justice’s programme which stimulates that they must provide a list of American clients who conform to US tax requirements and those who do not. The scheme was set up in 2013, however, the validity of Swiss banks’ approach is being put into question. 

One lawyer, quoted by the Financial Times, said that “Swiss banks are trying to compel customers to do something that a customer is not contractually obliged to do and by blocking accounts, they are committing an act of coercion that is problematic under Swiss penal, contractual and regulatory laws.” 

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