Word: swiss
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...that wasn't enough to end the bank's troubles. In February, the Department of Justice filed a civil lawsuit against UBS seeking the identities of 52,000 more Americans suspected of stashing a total of $15 billion at the bank. This time, the Swiss were having none of it. Citing bank-client confidentiality guaranteed in the Swiss constitution, Switzerland's government has forbidden UBS from complying. It has also threatened to "take control of the data at UBS" to prevent the bank from handing the accounts over to the Americans...
...Swiss claim that the U.S. proceeding against UBS breaks the terms of the treaty between the two countries that permits an exchange of information on tax matters only in individual cases where a specific and justified request is made. "The blocking order that the Swiss government is prepared to issue would be a first, but it's a reasonable step to take in light of the IRS's threatened disregard for international treaties and provisions of Swiss law," says James Nason, spokesman for the Swiss Banking Association (SBA), a trade group for Switzerland's financial institutions. (Read "The Swiss Question...
...meantime, the U.S. government's insistence on enforcing its laws on foreign soil doesn't sit well with the Swiss. "The U.S. seems to prefer the role of an increasingly obnoxious tyrant," says Andy Sundberg, a retired businessman and founder of the Geneva-based American Citizens Abroad, an advocacy group for expatriate U.S. citizens. "It is obsessed with humiliating this small country, forcing it to betray the principles of its own constitution...
...Sundberg says that with the IRS intensifying its hunt for alleged tax evaders, Swiss banks, fearful of potential legal problems, are closing the accounts of resident Americans and refusing to open new ones. Both UBS and Switzerland's second largest bank, Credit Suisse, have told Americans to move their money into specially created units registered in the U.S., or lose their accounts. Many smaller Swiss banks are simply turning away Americans. (See pictures of the top 10 scared traders...
...While the long-term damage to UBS may be difficult to gauge, experts say its reputation as a reliable institution has taken a beating. "Clients worldwide have lost trust in UBS's ability to protect their privacy," says Teodoro Cocca, former professor of asset and wealth management at the Swiss Banking Institute in Zurich. "This will affect UBS's attraction for wealthy clients - the main franchise of the bank...