Swiss Banks "Cooperate" with U.S. Officials

Eight Swiss banks recently turned over data on its U.S. clients suspected of tax evasion to U.S. officials. At the Swiss government's request, however, the data was encrypted and will remain so until certain of their own demands are met. According to the Swiss government, the encryption key will not be turned over until Switzerland and the United States reach a broader agreement on information exchange.

Under current Swiss law, non-encrypted data can be transferred only in individual cases under the following circumstances:

(1) U.S. authorities submit a request through the current income tax treaty between the U.S. and Switzerland and

(2) Only if the individual in question has broken Swiss law.

The eleven Swiss banks currently under investigation are Credit Suisse, Bank Julius Bär, Bank Wegelin & Co., Basler Kantonalbank, Zürcher Kantonalbank, HSBC Private Bank (Suisse), NZB, the Swiss daughter bank LLB, and the Israeli banks Leumi, Hapoalim and Mizrahi. The encrypted data that was transferred includes between 4 and 6 million e-mails between Swiss bankers and their U.S. clients.