* Credit Suisse AG, owner of Clariden, took similar action
* Disclosure is latest breach in Swiss financial secrecy
* Comes amid US crackdown on offshore tax evasion
By Lynnley Browning
Nov 9 Clariden Leu AG, with roots that make it
Switzerland's oldest private bank, has begun telling certain
U.S. customers suspected of offshore tax evasion that it will
disclose their names to the U.S. Internal Revenue Service, with
the help of Swiss authorities.
The move by the Zurich-based bank, whose parent is Credit
Suisse AG , marks a watershed in the battle
against Swiss banking secrecy. Credit Suisse acknowledged on
Tuesday a Reuters report that it had mailed out its own
letters, on its own letterhead, to certain U.S. clients.
Clariden Leu, once a stand-alone subsidiary of Credit
Suisse AG, Switzerland's second largest bank, absorbed other
private banking divisions of Credit Suisse in 2007. The bank's
forerunner was founded in 1755 in Zurich.
Clariden Leu's notification by registered-mail letter, a
copy of which Reuters obtained on Wednesday, is similar in
wording to one sent out by Credit Suisse. Clariden Leu
acknowledged its mailings to an unnamed number of clients in a
statement on Wednesday.
The fact that Clariden Leu and Credit Suisse have mailed
separate letters on separate letterhead suggests that Credit
Suisse is ensuring that all divisions and units of its
sprawling private banking operations serving U.S. clients are
covered under the latest IRS data request.
The move by the two Swiss banks to disclose American client
names and account information is the latest event in a showdown
between Switzerland and the United States over the withering
tradition of Swiss bank secrecy.
U.S. authorities, who suspect tens of thousands of wealthy
Americans of evading billions of dollars in taxes through Swiss
private banks in recent years, are conducting a widening
criminal investigation into scores of Swiss banks and
international banks with Swiss operations, including Credit
Suisse, HSBC Holdings plc , and Basler Kantonalbank, a
large Swiss cantonal, or regional, bank.
Both banks say in their letters that the handover of names
and account details will take place following a recent formal
request for the information by the IRS. The Clariden letter,
like the Credit Suisse letter, says that the IRS request covers
accounts maintained at any time over the period from Jan. 1,
2002, through Dec. 31, 2010.
"The US Internal Revenue Service (IRS) recently submitted a
request for administrative assistance to the Swiss Federal Tax
Administration (SFTA) pursuant to the 1996 double tax treaty
between Switzerland and the USA, seeking information with
regards to accounts of domiciliary companies belonging to
certain US persons as beneficial owners (the Treaty Request),"
Clariden said late on Wednesday on its website. "In connection
with the IRS Treaty Request, the SFTA has issued an order
directing Credit Suisse AG to submit responsive account
information to the SFTA."
MAY PRESAGE CREDIT SUISSE DEAL
The Clariden letter, on company letterhead, is dated Nov. 2
and comes from the bank's Zurich headquarters. It is signed by
two senior bank executives -- Marcel Schmocker, head of legal
and compliance for the bank's executive board, and Peter
Schoch, a managing director. Like the Credit Suisse letter, it
cites a formal request made by the IRS to the Swiss Federal Tax
Administration, or SFTA, via a tax treaty between the two
It was not immediately clear how many U.S. clients had been
sent the Clariden letter or the Credit Suisse letter.
The letters may presage the entry by Credit Suisse into a
deferred-prosecution agreement with the U.S. Justice
Department, which is conducting a criminal investigation of the
bank, according to U.S. sources briefed on the matter.
Credit Suisse in July received a target letter from the
Justice Department, a formal notice that it was the subject of
a federal criminal investigation into its offshore private
Switzerland is trying to craft a deal with the United
States that would cover its entire banking industry of some 355
banks. Switzerland had wanted a deal that covered accounts
dating back to early 2009, when UBS AG , Switzerland's
largest bank, averted indictment and reached a $780 million
deferred-prosecution arrangement with U.S. officials. But the
two letters from Credit Suisse and Clariden Leu suggest that
U.S. authorities are unwilling to accept a deal that would
start with 2009 rather than the January 2002 date cited in the
The Credit Suisse letter gives the client two choices:
either agree in writing to the turnover of the client's data to
the Swiss tax authorities, which will then forward it to the
IRS, or hire a lawyer in Switzerland and contest the process, a
move that some U.S. lawyers have generally said is futile.
Under U.S. law, contesting a handover requires the American
client to inform the U.S. attorney general that he is doing so
-- a move that effectively discloses the identity of the
suspected tax evader to U.S. authorities.
Switzerland has broadly interpreted its tax treaty with the
United States to mean that the United States must generally
already possess the names of suspected American tax evaders in
order to gain further information on their Swiss bank
Switzerland recently showed signs of softening on that
interpretation. In a little-noticed sea change, Swiss
government officials said in August that they would consider
processing treaty requests based on "behavioral patterns," as
opposed to concrete names.