ZURICH (Reuters) - The Swiss financial markets regulator FINMA was right to order the handing over of client data by UBS to the U.S. authorities, a top court ruled on Friday, despite the country’s cherished tradition of bank secrecy.
FINMA ordered UBS to hand over the data of 255 customers to the U.S. Department of Justice in 2009 as part of a settlement to avert criminal charges being levelled against Switzerland’s biggest bank.
“Such an indictment would have led to the bankruptcy of the bank which in turn would have caused serious and virtually uncontrollable economic repercussions for Switzerland,” the Swiss Federal Supreme Court said in a statement.
“Since FINMA had compelling reasons to believe that not relinquishing the customer data to the U.S. Department of Justice would have seriously impaired Switzerland’s financial markets and have led to serious repercussions for the Swiss economy, the action taken by it was shown to be lawful.”
The ruling overturns a 2010 decision by the Swiss Federal Administrative Court that FINMA’s decision was unlawful in a case brought by UBS customers whose data was handed over. If the Supreme Court had upheld that ruling, UBS clients could have sought damages from the Swiss state.
UBS also paid a fine of $780 million in exchange for the dropping of the U.S. investigation and later handed over details of a further 4,450 accounts to settle the case.
Earlier on Friday local rival Credit Suisse said it is being probed by the U.S. Department of Justice as part of a broader investigation into banks suspected of helping Americans evade taxes.
Switzerland and the United States have been in talks to try to reach a multi-billion dollar deal to get the investigation dropped in return for the banks paying a fine, closing their undeclared offshore banking businesses to Americans, and turning over client names to the Internal Revenue Service (IRS).
Offshore tax havens have come under heavy attack in recent years as cash-strapped governments seek to boost revenues in the wake of the financial crisis, forcing countries like Switzerland to pledge to cooperate more to help hunt tax evaders.
Reporting by Emma Thomasson; Editing by Greg Mahlich