Swiss banks told to avoid accepting untaxed funds

In a surprise move to crack down on Swiss banks being used as tax havens, authorities there have told the banks to tighten due diligence measures prevent ''the acceptance of untaxed assets more effectively'', as far as is consistent with client confidentiality.

"The focus is on enhanced due diligence requirements for banks when accepting assets as well as a requirement for foreign clients to make a declaration on the fulfilment of their tax obligations," the Swiss Federal Council, the country's top policy-making authority has said.

''At a first level, past tax problems should be settled in particular cases of clients living abroad whose assets have not been correctly taxed. This occurs by regularising the assets from existing client relationships from a tax viewpoint, thereby lowering the legal risks for banks,'' the department said.

The international withholding tax agreements will be used for taxing taxpayers ''in accordance with the regulations of their country of domicile''.

''There is international interest in this approach and it will be pursued by the Federal Council beyond the agreements already negotiated with Germany and the United Kingdom,'' department's statement said.

It, however, opposed the idea of 'automatic information exchange' with any other country, asserting the 'bank client confidentiality' should be respected as far as possible.