Switzerland’s data protection commissioner has waded into the United States tax evasion row by demanding that banks stop handing over information to the US authorities that reveal the identity of staff.
Hanspeter Thür has written to several banks to determine what data has already been transferred to the US Department of Justice and how they justified including telephone numbers and written correspondence.
“We have informed them that we are opening an analysis to verify the legality of the data transmitted to the US,” Thür told the Tages Anzeiger on Wednesday. “Until we have the results, we have demanded that no further bank employee data be sent to the US.”
In April, the Swiss government authorised some banks to transfer records after the US threatened to open criminal proceedings against them.
The data was supposed to be encoded to protect the identity of individuals, but it has since come to light that key information has been pieced together to reveal the names of client advisors and other bank employees.
Civil complaints lodged
Several bank staff have complained that this has left them open to criminal prosecution for aiding and abetting tax evasion. Even employees that had nothing to do with advising clients are too fearful of travelling abroad in case they get extradited to the US.
Earlier this month, the Tribune de Genève newspaper reported that two teenaged children of a Swiss bank employee were detained in the US for six hours while visiting their grandparents and questioned about their father’s whereabouts.
Dozens of bank workers have sought legal advice, resulting in test cases being launched against the banks involved, the government and the Financial Market Supervisory Authority.
The Federal Prosecutor’s Office announced on Monday it had dismissed one case, saying there was nothing to indicate any laws had been broken.
The plaintiff, a retired employee of the HSBC bank, will appeal to the Federal Criminal Court according to his Geneva lawyer Douglas Hornung.
Thür admitted that he only knew of the government’s April decision when “numerous” bank employees started to contact his office.
„No alternative“
The watchdog sent out letters last month to banks, the Swiss Bankers Association and the Swiss Private Bankers Association to set out the restrictions of handing over information according to Swiss law.
“We assumed that our concerns would be taken into account,” Thür said. “But last week we received information that HSBC had sent a second batch of bank employee data to the US.”
“I have grave doubts whether the publication of bank employee data was legal.”
Thür threatened legal action against banks that fail to comply with his demands for information.
Defending the government’s April decision to allow the data transfer, Finance Minister Eveline Widmer-Schlumpf told the Tribune de Genève newspaper it was the only way to avoid „destroying workplaces“.
„What was the alternative?“ she said in the interview. „What would have happened had we forbidden the banks from cooperating and left them with no means to defend themselves against this procedure?“
While the data commissioner acts mainly in an advisory and dispute settlement role, it also has enough teeth to haul miscreants that break data protection laws before the courts.
Last year, the watchdog won a court ruling that compelled Google to protect the privacy of individuals visible in its Street View application. The Federal Court lifted some restrictions of that decision in June, but the combined rulings were widely seen as a victory for the data protection commissioner.
UBS was the first Swiss bank to be investigated by US prosecutors for tax evasion.
In 2009 it was forced to pay a $780 million fine for helping US citizens avoid paying tax.
The Swiss government agreed to hand over the names of 4,500 American UBS clients, a decision backed by parliament a year later.
Some 380 clients appealed against this handover to the Swiss courts, but in November of last year only 100 cases were upheld or partially upheld.
A number of Swiss bankers and lawyers have been arrested or indicted in the US, including three managers at the Wegelin private bank. In January, Wegelin collapsed, handing most of its activities to the Raiffeisen group.
Eleven Swiss banks are still under investigation in the US. Talks are ongoing between the US and Swiss authorities to find a global solution to the crisis.