Court Approves Bank Data Transfer to France

A Key Decision

The Swiss Federal Court has decided, with a voting three to two, to approve the transfer of UBS’s clients data to Paris tax authorities. As the Court stated the request by France’s administrative assistance request was an “inadmissible fishing expedition”. The decision was also justified by the fact that the specialty principle defying that the information can be used for other purposes is not enough to justify the refusal of the transfer, especially that the French authorities have given their guarantees in that matter. The decision is applicable only to UBS’s clients, but could be a precedent that would green light other similar rulings. The French authorities might be interested in pursuing other Swiss banks since they are so successful in chasing for taxes the country’s biggest bank institution. The data in question includes account details like names and addresses of French citizens who are suspected to evade tax by hiding funds in Switzerland.

What Is It All About?

The SFC’s decision is a part of the ongoing proceedings on the UBS tax evasion case. It started all the way back in May 2016, when the French tax authorities asked for assistance from the Federal Tax Administration by disclosing historical data about UBS’s clients that lived or had lived in France. The FTA said ‘yes’ in February 2018, but UBS filed a complaint against that decision. It was upheld by the Federal Administrative Court, which wished to receive a specific judgement thus took the case to the Swiss Federal Court. The legal recourse of this case has now reached its end with the Swiss Federal Court’s groundbreaking decision. It is worth to mention though that the Court ruled this data can’t be used by prosecutors that chase UBS in the criminal case in Paris. The Swiss bank together with its French subsidiary were accused and found guilty of money laundering processes carried on proceeds from tax fraud in the period of 2004-2012. UBS denies helping clients avoid taxes and is appealing the massive CHF4.2 billion penalty (around EUR3.7 billion with an average exchange rate) imposed in February.

Reactions to the decision

The decision of the Swiss Federal Court has triggered various reactions from banking, fintech world. Obviously UBS gave its statement, in which it stated that:  "We will carefully review the written verdict. Regardless of the decision, it is important to note that the Swiss Federal Tax Authority will have to ensure that any data cannot be used against UBS in its pending criminal proceeding in France.” Also the Swiss finance ministry stated it will "carry out a detailed analysis once the written grounds for the judgment are available". The finance minister is aware that this decision may affect each future similar request. Very worried about the decision is the Swiss banking lobby. The Swiss Bankers Association is very skeptical about the ruling, though it acknowledges that data won’t be used in the criminal case. Banking and fintech market is worried that the use of data for other purposes than tax would be permitted that could weaken the principle of specialty. Other huge Swiss banks, like Credit Suisse, are keeping an eye on the trial. Credit Suisse is reportedly also under the investigation by the French authorities.

As a fintech company, we track all news from the banking sector and report on it. Like ExchangeMarket, UBS offers its clients currency exchange services. At exchangemarket.ch you can always find the current euro exchange rate and compare it to the UBS Euro exchange rate to find the best EUR CHF exchange rate.