Swiss Banking Secrecy: No Problemo, No License!

By Karl Denninger, The Market Ticker

Bloomberg reports:

Jan. 22 (Bloomberg) — A UBS AG account holder won a Swiss court ruling that may prevent data from being disclosed to U.S. authorities in at least 25 cases involving suspected tax fraud.

The failure to complete certain U.S. tax forms or declare income isn’t “tax fraud” that requires disclosure under treaties between the two countries, Switzerland’s Federal Administrative Court ruled in a judgment released today. The ruling is the second this month criticizing government decisions to give data to the U.S.

I respect the right of The Swiss to define “tax fraud” however they’d like.  I also respect their right to claim that US Citizens can do whatever they want in their nation.  That’s fine.

BUT – UBS has no right to a banking license in The United States.  It does not have a right to ply its wares here, to buy and sell securities in the US markets, to solicit for business here or to enjoy any of the protections that a US business operation enjoys.

Therefore, the correct response for the United States is to immediatel revoke UBS’ and all other swiss corporations licenses to operate in The United States.

If US Citizens wish to expatriate funds (in whatever form) to Switzerland and hide them there (and the profits thereupon) to evade taxation, they have the right to do that.  Swiss law apparently protects such evasion as a human right.

But US law says that all citizens are required to declare all income no matter where earned, in the US or abroad, and that conspiracy with others in a scheme to avoid doing so is a criminal act.

We, of course, cannot prosecute such acts outside the boundary of The United States.

But we are also under no obligation to permit a firm that has as its stated and actual operational goal the evasion of tax liabilities by citizens of The United States a banking license, as that license is a privilege bestowed upon a corporation or person, not a right.

As such the proper response to this ruling is to immediately revoke the US banking licenses of all Swiss-based banks.

More articles from the Market Ticker….