By Jason Rhodes
ZURICH, Jan 8 (Reuters) – The Swiss financial regulator broke bank secrecy law last year when it ordered UBS to hand over the files of nearly 300 clients to U.S. authorities, a Swiss court said on Friday.
Regulator FINMA decided on Feb. 18 to allow UBS to hand over some client data to U.S. tax officials, weakening the country’s strict bank secrecy rules in an effort to end a damaging probe into its biggest bank, which prompted clients to pull billions of francs from accounts and leave in droves.
“Even though FINMA was in a difficult position because of the threat of charges against UBS AG, it should not have ordered unilaterally the passing on of data outside of a proper process of a request for official assistance,” Switzerland’s Federal Administrative Court said.
Zuercher Kantonalbank analyst Andreas Venditti said the ruling provided more clarity on FINMA’s role in matters of bank secrecy, although the judgement could still be challenged.
“The damage has already been done for UBS and maybe for the whole Swiss banking industry. But if this ruling means FINMA cannot act alone in future, it certainly helps,” Venditti said.