U.S., Switzerland Spar Over Bank Secrecy

The U.S. is pressuring Swiss bank UBS to reveal the names of some of its wealthy American clients, and the Swiss government is helping the bank resist.

The U.S. government wants the 52,000 names because they are suspected of hiding money through the bank to avoid paying taxes. But Switzerland places great value on its bank secrecy.

Switzerland’s President Hans-Rudolf Merz asked Treasury Secretary Tim Geithner to push the Justice Department to drop a lawsuit that seeks to make UBS fork over the names.

Merz’ request was revealed by Switzerland’s acting consul general in New York, Daniel Haener, to The New York Times Sunday.

A Treasury Department statement issued Sunday says Geithner “listened to the Swiss concerns regarding the UBS case and indicated that he understood the importance of appropriately resolving the matter.”

Whatever Geithner decides to tell the Justice Department, it may fall on deaf ears. Justice “is not going to give in” on the case, a senior person with knowledge of the issue told The Times.

Swiss law forbids banks to disclose customers’ names, and violators are subject to jail time and big fines.

The current U.S.-Swiss tax treaty doesn’t require Switzerland to reveal customer names. But the U.S. wants a new accord that does.

Switzerland has suggested a new agreement that would allow disclosures in the future, but that wouldn’t apply to bank clients whose names U.S. authorities want now.

In February, UBS agreed to pay the U.S. a $780 million fine for the Americans’ tax evasion and handed over 300 names.

So far, prosecutors have charged two of UBS’ American customers suspected of cheating on their taxes. Both men live in South Florida.