Following the Bradley Birkenfeld revelations and the reports that the US authorities have requested Bern to provide information on US citizens holding assets in Switzerland there have been a number of reports suggesting improbable things such as that UBS may divulge the names of up to 20,000 clients to the US. This is plainly ridiculous.

Under Swiss Banking Secrecy laws, Switzerland may divulge information in the event of tax fraud. Given the Qualified Intermediary  agreements in place between the US and overseas banks and financial institutions this would mean in cases where a client is demonstrated to have provided, for example, a fraudulent statement on an IRS W8-BEN. This is the form that investors in US securities need to complete to obtain tax benefits if they are not US persons but is a form of self declaration if they are.

Remember also that the QI agreements apply only to US citizens holding US assets in overseas accounts. If these citizens hold only euro assets then the agreement has no jurisdiction and there is no reason for Bern to declare these clients to the US authorities.

Speaking at a British Swiss Chamber of Commerce lunch in Geneva on Friday Mrs Micheline Calmy-Ray, a Swiss Federal Councillor and the head of the Federal Department of Foreign Affairs referred to the Bradey Birkenfeld case. She stated that the US and Switzerland are in close contact and have excellent relations. “A solution to the request made for information will be found within the frame of the current bilateral agreements,” she said.

So US citizens who have played to the strict rules of the QI agreements should have nothing to fear from disclosure despite any reports in the US to the contrary.