Swiss bank Credit Suisse has sent letters to some US clients, stating that theiraccount details may be given to the Internal Revenue Service,  it covers accounts open from 2002 to the end of last year. Clients are told they can either agree to the handover of data to Swiss tax authorities who can send it to their US counterparts, or contest the process.

The letter concerns a demand from the Swiss Federal Tax Administration. This concerns a request for administrative assistance from the IRS to the SFTA under the 1996 double tax treaty between the two nations.

According to the Double Tax Treaty, the US and Swiss governments will share information bank accounts of tax evaders.  In recent years US authorities have pressured several global banks to help them fight tax evasion. The US Department of Justice’s initial target was Switzerland’s other major bank, UBS.

It threatened UBS with legal action if the Swiss bank failed to hand over the details of 4,450 US customers suspected of tax evasion. In June last year the Swiss parliament passed legislation permitting the country’s banks to share customer details with the US authorities.

UBS ended up paying a $780m fine, but more importantly the new legislation put an end to Switzerland’s famed banking secrecy.

Credit Suisse bows under US pressure

Report by Adhir Roy Chowdury