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Switzerland Is No Haven for Whistleblowers

POSTED ON Oct. 3, 2018
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Although banking secrecy is considered a thing of the past, the deck is still stacked against Swiss whistleblowers, reform advocates told members of the European Parliament.

Switzerland's slander and libel laws are used aggressively to stymie investigations and damage whistleblowers, Rudolf Elmer, a Swiss whistleblower, and Andreas Frank, an anti-money-laundering expert, told the Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance on October 1 in Strasbourg, France.

Elmer, who worked as a private banker for Julius Baer from 1994 to 2002, was convicted in Switzerland in 2011 and 2015 for violating bank secrecy laws by passing confidential financial information about the bank's customers to WikiLeaks.

“Reporting a crime in Switzerland is a crime,” Elmer said. Whistleblowing leads to “social, professional, and financial death. . . . Retaliation against whistleblowers is, in my view, extreme,” he said.

There is a flourishing business in Switzerland for lawyers and intermediaries setting up accounts in Bermuda and other tax havens with assets hidden under nominee directors, Frank said. The disclosure of beneficial ownership information can mean prosecution for libel and slander, he said, and because the EU automatically recognizes the results of a Swiss court case, the damage inflicted on a whistleblower is greater.

With their stringent libel laws, the United Kingdom and Switzerland are destinations for those looking to prevent investigations into their finances, Frank said. Self-regulation by the Swiss banking industry cannot solve the problem because even confidential information given to Swiss supervisory authorities can result in libel cases against the whistleblower, he said.

Also, Switzerland is using cryptocurrencies to veil illicit money transfers, Frank said. He recommended that Switzerland be moved from the EU’s gray list to its blacklist of tax havens. “The European Union has to play hardball with Switzerland, or in 10 years there will be no changes," he said, recommending that the EU follow the example of the United States in putting strict controls on banking interactions.

However, the requirement for inclusion on the blacklist remains noncooperation, and Switzerland has made strides in cooperating with the EU, such as the automatic exchange of information, noted Dieter Kischel, head of sector of harmful tax practices at the European Commission's Directorate-General for Taxation and Customs Union. It will take more time to evaluate the quality of the information shared, he said in response to a question.