Famed tax haven Switzerland chases hidden cash

Liechtensteinische Landesbank Aktiengesellschaft

02/02/2017 11:43

By Joshua Franklin 
    BERN, Feb 2 (Reuters) - Switzerland, a perennial target for 
governments pursuing tax evaders, is finding out what it is like 
to chase down hidden cash. 
    The Swiss finance ministry said on Thursday it had reached a 
deal with Liechtenstein to exchange tax information, potentially 
helping to uncover billions of dollars in undeclared assets kept 
by Swiss citizens in neighbouring Liechtenstein. 
    "These assets will be declared and the person has the chance 
either to repatriate the assets to Switzerland, or he will be 
taxed and he keeps his money in Liechtenstein," said Joerg 
Gasser, head of the State Secretariat for International 
Financial Matters, a branch of the finance ministry. 
    The amount of undeclared Swiss assets in Liechtenstein, a 
principality of just 38,000 people sandwiched between 
Switzerland and Austria, is unknown.  
    However, around 3.5 billion Swiss francs ($3.5 billion) 
could be with Liechtensteinische Landesbank  LLB.S , one of the 
country's biggest banks, according to an estimate by Andreas 
Brun, a banking analyst at Mirabaud Securities LLP.  
    The situation is a role reversal for Switzerland, whose 
strict bank secrecy laws for years had made the wealthy Alpine 
country a haven for hidden money. 
    A turning point came in 2007 when Bradley Birkenfeld, a 
former employee at UBS  UBSG.S , blew the whistle on tax evasion 
practices - including smuggling diamonds in a toothpaste tube - 
and opened the door for a broader clamp-down on tax evasion in 
Switzerland. 
    UBS, Switzerland's biggest bank, and cross-town rival Credit 
Suisse  CSGN.S  eventually paid $780 million and $2.6 billion 
respectively to U.S. authorities over charges they helped 
wealthy Americans evade tax.  
    The Swiss-Liechtenstein agreement is under a global tax 
sharing initiative spearheaded by the Organisation for Economic 
Co-operation and Development (OECD). 
    Under the OECD's Automatic Exchange of Information (AEI), 
banks pass on information to local tax agencies, which in turn 
share it with foreign counterparts.  
 
    ($1 = 0.9892 Swiss francs) 
 
 (editing by Ralph Boulton) 
 ((joshua.franklin@thomsonreuters.com; +41583067007; Reuters 
Messaging: joshua.franklin.thomsonreuters.com@reuters.net)) 
 
Keywords: SWISS TAX/LIECHTENSTEIN