As a supplement to my comments yesterday (see below) here is a partial report from Swissinfo.com by reporter, Matthew Allen.
Two years ago, Germany paid a substantial sum for illegally obtained information from a Liechtenstein bank. The move netted some high profile tax evaders and forced a concession from Liechtenstein to amend its ways in future.
But Switzerland should not back down quite so easily, according to Arturo Bris, a professor of finance, law and economics at Lausanne’s IMD international business school.
Bris believes that Germany has "shot itself in the foot" after arguing for so long that Switzerland’s banking system encouraged criminal activity. By conspiring with criminals itself, Germany has now lost the validity of its argument and could be successfully challenged by Switzerland in its own courts, according to Bris.
Swiss Finance Minister Hans-Rudolf Merz and Merkel.
Thanks to the comments by [German] Chancellor Merkel, the situation looks brighter in Switzerland than it did two weeks ago," he told swissinfo.ch. " I do not see any advantage in this illegal act which will surely backfire on Germany.
"Switzerland should remain strong and put more effort into explaining that the problem lies not with its secrecy laws, but with criminals in other countries. The failure lies with other countries failing to prosecute criminals inside their own borders," he added.
Red-handed and Red-faced
Putting the latest German incident into isolation, Bris may have a valid argument. But Switzerland is fighting attacks against its system of banking secrecy from all sides.
Last year, Switzerland was forced to renegotiate a host of double taxation treaties with other countries to remove itself from an OECD "grey list" of uncooperative tax havens.
The Swiss government then had to strike a deal with the United States to hand over information on thousands of UBS clients after the bank was caught red-handed in a tax evasion probe. A Swiss court ruling that at least part of the deal was illegal may leave a red-faced government having to go back to the US authorities asking to re-negotiate.
Encouraging Bank Robbers
If Germany goes ahead with its threat to use the stolen Swiss data to hunt down its own tax evaders, it could create a lucrative market for other disaffected bank staff to follow suit in the hope of legal protection and a windfall pay day.
Swiss banks already operate very tight levels of security to protect client data, according to John Ederer, Deputy Head of Forensic - a unit that advises companies on white collar crime risks - at KPMG Switzerland.
Security Strategy
Undoubtedly the rules of the game have changed in the last few years and people are becoming more aggressive. Technology is constantly updating, but it is very often the most basic controls that prove the most effective," he told swissinfo.ch.
For example, banks routinely segregate different aspects of client information into separate servers and carefully restrict access while monitoring staff activities. Staff are also restricted on what they can print and the use of USB memory sticks is routinely forbidden.
Human Element
However, any security system is only as strong as its weakest link, according to Ederer.
"The principle weakness of any environment is the human element. If you have one rotten apple in a barrel full of perfect apples, that could compromise the whole system," he said.
"The strongest human element controls are a positive ethical environment, effective training, codes of conduct, good direction from senior management and leading by example."
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