Rejecting US threats, the National Counsil tossed “Lex USA”. The big question now is if the US will follow through with its threats of destroying 18 banks, and how many innocent people will be harmed in the process. Yesterday, Postfinance expressed great fear that it might be the target of US wrath since it is one of the last banks which still accepts US clients living in Switzerland. My best guess is that the US needs to use Switzerland as a scape goat to scare the world into joining FATCA, since FATCA would otherwise fail.
The general view in Switzerland seems to be that if some banks did wrong, then they should be held responsible for their actions without the parliament being involved, while those in favor of Lex USA generally feared the American blackmail.
A lot of commentary that I have read so far in the US seemed to lean more in favor of Switzerland. There were a few calls for war, kicking Swiss out of the US or prohibiting Americans living in Switzerland from having a local bank account, but otherwise many individuals showed an interested in respecting personal privacy and resisting foreign powers.
The votes can be seen here.
This new American chocolate which does not melt is a bit like #LexUSA, containing inside secret materials.
— Marie P Bender (@mariebender) June 19, 2013
Some of the Swiss papers’ reactions to the news:
http://www.swissinfo.ch/eng/swiss_news/US_tax_bill_rejection_fails_to_ignite_press.html?cid=36208750
Council of States have adopted it today:
http://www.bluewin.ch/fr/index.php/136,837907/Le_Conseil_des_Etats_adopte_laccord_FATCA_avec_les_Etats-Unis/fr/news/suisse/sda/
“Even if Swiss lawmakers ultimately reject the plan, the issue won’t go away, said Scott Michel, a tax attorney at Capelin & Drysdale in Washington.
“Ultimately the U.S. will get the information it wants, although it will come more slowly unless the Swiss parliament reconsiders,” he said.”
http://www.capdale.com/the-wall-street-journal-quotes-scott-michel-swiss-parliament-pushes-back-on-us-banks-deal
BRAVO, Switzerland! (or at least the House of Representatives!) My favourite out-of-Canada tourism destination has just given me yet another great reason to spend my out-of-Canada travel time and budget in Switzerland and NOT in the US, even cost and time to get there is greater for me.
Now let’s see if our own government can grow a pair and show as much spine as the Swiss have!
I especially like the approach taken toward their banks, namely, “you chose to invest in the US, it was a mistake, you pay the price for that and don’t expect the rest of your country to bail you out.” I’d say exactly the same thing to Canadian Bankers Association’s members, especially those banks that now have more money and branches in the US than in Canada. If they want to do that, why don’t they damn well just be honest, pull up their roots and move all their operations lock stock and barrel to the US and suffer the consequences. No more bailouts, not out of our pockets and not at the expense of our Charter and privacy rights in Canada! You made your bed; now you can sleep in it.
The situation with the Basler Kantonalbank is quite interesting. Jack Townsend lists it as one of the banks that America might choose to stomp on and its stocks are falling. The reason for America’s dislike this bank is that it once accepted about 20’000 Americans. A few days ago, the bank justified why it didn’t discriminate against American clients:
Translation: We have in Basel an industry in which many Americans work. There are hundreds of US citizens in the region whom we must provide financial services for. We are the canton bank of Basel and most of our clients are local. Nevertheless, around 20% of our 200’000 clients live abroad due to our near proximity to the border.
Actually PostFinance does NOT accept Americans, at least since late 2012 when I tried to open an account there.
@Wellington, this is from the EF forum thread on PostFinance and American account holders:
http://genevalunch.com/2013/06/11/postfinances-6000-americans-could-feel-us-heat-too/?repeat=w3tc
Doesn’t mean that they haven’t changed their minds though. I haven’t heard of any recent problems with opening an account there so long as you’re prepared to sign the W-9. But if it’s anything like UBS it seems to depend very much on which branch you go into. Some UBS branches are refusing, but others are happy to take you on, providing you sign the necessary forms. It’s a bit odd because any identified American is automatically moved over to their special US division so it shouldn’t matter where you open the account at.
More on the fallout since the rejection by the Swiss:
http://www.swissinfo.ch/eng/swiss_news/Surveying_the_wreckage_of_torpedoed_US_tax_deal_.html?cid=36213406
Share prices in several banks are dropping too.
What I just don’t get is why the US is pushing this so hard. There is already an IGA agreement in place ready to take effect next year, providing the House of Reps approve it and the Swiss don’t throw a late wobbly (possible I know). So why this sudden bill put before the Swiss government, with little/no info in it on what’s actually going to happen, with a big push to take it or else? Was it just an attempt to set a precedent on breaking/breaching Switzerland’s bank secrecy rules or are they just plain pissed because they realise that the Swiss are very unlikely to totally give up banking secrecy, even if they change the way some of it works? As FATCA doesn’t become active until Jan next year, why this particular attack? The Swiss are more geared up and ready to implement FATCA than any other country in the world so it just seems to me that it’s more about trying to squeeze funds – without spending their own – out of Swiss banks by being able to fine them billions.
I’m so glad that I renounced when I did because I can see many of the banks who still take Americans refusing to do so in future, assuming those banks can stay afloat. With limited options already life in Switzerland for US citizens/green card holders will become impossible.
@ Medea
I can confirm that the Zurich branch of PostFinance does not accept US persons. I had to personally go for an interview to open an account at PostFinance. The rep used standard forms on her computer to fill in my personal details. In the middle of the interview, the following dialog took place:
Rep: “OK, now Wellington. Do you have anything to do with the US? I mean, are you a US person, or do you have relatives there, or might you have a bank account there?”
Me: “No, absolutely not” (which isn’t strictly true, but as an ex-US person I’ve learned to keep mum on such details in Switzerland).
Rep: “OK…” (she stares at screen; typing noises)
Me: “Uhm, why?”
Rep: “Well, if you had answered “yes” in any way, the account opening process would have just stopped, and no more screens would have come up. We don’t take US persons as customers.”
@Wellington…
So, does this mean, that all it takes is a “No, absolutely Not” in answer to a question to foil the Global GATCA system that the world is spending billions to set up?. Boy, this is water proof protection against evasion, eh?
@Wellington, then this must be something that’s happened since they became a proper bank a few weeks ago.
@ Just Me
Despite presentation of a foreign passport, I do have a US accent when speaking German, so I might not have fooled her entirely. My experience is that bank employees think differently than their higher-ups and compliance departments and generally are better judges of new customers. I have the impression that Swiss bank employees hate bureaucracy as much as we do and as long as I did not answer “yes” to such questions, or provide any documented evidence of being a US person, they will not try to probe too deeply into my personal matters. I take this as a reassuring sign of human decency in the face of all this wasteful and counterproductive GATCA mess
@ Medea
Actually it happened in October, 2012.
Another interesting story. I was a decade-long customer of UBS in Zurich and during one year I moved back to the US for a job. Back in those days I wanted to be truthful and play by the rules, so I told UBS to send my statements to a US address. This was in 2008 at the start of the unfolding tax scandals with that bank, but at the time I generally didn’t inform myself about financial matters and was ignorant of events. UBS told me I had to leave since they would eventually terminate my banking relationship with them, for having become an “offshore customer.” But I reasoned that since I was in the US for a short time, they wouldn’t follow through with the termination. I tried to reason with them, and after a year I did in fact return to Switzerland as a full-time resident. But they still wanted to kick me out.
A friend of mine who is a lawyer sent them letters with copies of my residence permit and Swiss address, but to no avail. They didn’t communicate with him, but at the same time they stopped sending me communications about kicking me out. Then one day I couldn’t do e-banking to pay bills. My lawyer friend tried to contact the banker in charge of my account but got no useful response. Then a week later, they canceled my debit card, and I only found out about it while making a purchase.
Finally, I had to go personally to UBS to actually close the account and get my money out. I’ll never forget a UBS bank employee telling me “not to take it personally.” She meant well but in that situation I felt the whole thing was anything but impersonal.
PostFinance still seem to be taking Americans in. An American over at EF applied in the last couple of weeks and has been accepted. Must be a branch by branch confusion thing.
@Just Me
That precisely is FATCA’s Achille’s heel and makes it a sham, the self-certification aspect of screening. The whales don’t get to be big by getting eaten, do they?
In order for FATCA to be ‘airtight’ every banking customer should have to prove that they are NOT a US person. As I keep saying, to prove a negative.
Just wait until the US exposes one that’s slipped through the FFI’s FATCA screening. You can bet it will be a whale, too!
The whales are the ones who can easily buy a second citizenship so there is no way to really control them once they catch on to it. I guess i am lucky because i dont have an american sounding name and a passport from a different country. I am not rich…but just want to workaround fatca and switzerland
Well, it won’t happen in Switzerland bubblebustin. Banks are requiring copies of CLN’s to prove your non-US status should you say “no” to their questions and they suspect you of having US connections.
@Medea Fleecestealer
Where do they draw the line outside of self-certification? If there’s no indicia per se, but there other indications of US personhood, such as the slightest detection of an American accent or having a known American family member, will that land you in secondary interrogation? Guilty by association, until you can prove otherwise?
Providing a CLN is a perfect example of proving a negative, but even that’s not watertight. You could have stayed too long visiting relatives in the US! “Have you travelled to the US since you received your CLN?”
I really can’t see how FATCA can be enforceable without there being an exemption for non-resident USP’s with or without moving to RBT. Desperation and greed will never allow that though.
@Bubblebustin:
The three remaining banks* in Switzerland that accept USPs as new customers have different procedures from what I can determine. UBS has a five or six question form to identify possible USPs which must be signed by each new customer and when changes are made to existing customer accounts, as I understand it. PostFinance generally requires that a new customer present a passport, Swiss identity card, etc. to establish the person’s identity and nationality. PF seems to work on the basis of “primary nationality” (see thread comment below). I understand that Credit Suisse requires presentation of a passport or identity card to open an account but I have not been able to determine whether they have similar questions to those used by UBS.
The EnglishForum.ch has a running thread on PostFinance. This particular post from a dual Dutch/USC got my attention:
http://www.englishforum.ch/1842123-post13.html
As a comment, PostFinance is a business unit of the SwissPost and will only receive an official banking license at the end of June. PostFinance is co-located in post offices across Switzerland although there are some dedicated PostFinance offices in larger cities. Most of their employees are not particularly sophisticated regarding the banking side of the business and, indeed, when PF obtains a banking license in the coming days, PF will be prohibited from making loans for their own book until further notice.
*-There is some disagreement on whether there are only three banks in Switzerland that will open retail accounts for USPs.
Well, to a certain extent it is self-certification. On the form I got from UBS it states that you have to notify them of any change in your US status so if you stay too long in the US for some reason and become liable for tax you are supposed to notify them. What happens then, I have no idea. They may want proof that you’ve done the necessary filing in which case presumably you’d still be a customer, but they could just as easily decide to drop you.
You can choose not to tell them of course, but if/when they find out you haven’t told them then your accounts will be closed.
It’s going to depend on what action the US takes next. If they take the banks to court, then it’s bound to have repercussions. Whether they tighten up on American client checks or just decide they no longer want to deal with them remains to be seen.
It’ll also depend on what the Swiss government/parties do to change or keep Swiss banking secrecy. They know they’re going to have to do something, the pressure from the US and EU is too much to refuse altogether. But it’s got to be something that the Swiss people can live with because if they’re unhappy with what’s decided then there’ll be popular initiatives springing up to call for a referendum on it. And if there is a referendum and the people say no at that point, there’s nothing the Swiss government can do about it, except go back to the drawing board and start again.
This from Tax Girl on Forbes today…
After Official Rejection, Holes In Swiss Policy Leave Banking Industry Uncertain
@Just me, thanks for the update. That article is an classic example of nationalistic racism, which demonstrates a minor understanding of the issue with heavy bias leanings. For what it is worth, I responded with a few time-constraint mistakes.
@SwissPinoy..
Glad you put a comment up, as I did too. 🙂