Swiss Banks an Italian Target After Record UBS French Fine

(Bloomberg) -- Italian financial police are demanding Swiss lenders disclose the names of bankers working in Italy, setting up a potential clash with regulators after UBS Group AG was hit with a record fine by French authorities.

The Guardia di Finanza has sent a letter to Swiss lenders asking for a list of all their Italian units, data on local relationship managers, as well as an explanation of how Italian clients' assets are managed. The questionnaire, seen by Bloomberg, doesn't specify which banks it has been sent to.

Italian authorities sent the letter in January as part of an effort to crack down on Swiss banks in the country. The questionnaire was sent three weeks before a French court ordered UBS to pay more than $5 billion for helping French clients to launder their assets.

A spokesman for the Swiss Bankers' Association said it's aware of Italy's requests and has given guidance in cooperation with Swiss authorities to its members on how to respond. UBS, which is appealing the French fine, referred calls to the association.

A spokesman for the Guardia di Finanza declined to comment. The questionnaire was also sent to banks in Monaco and Liechtenstein, according to two people familiar with the probe. A spokeswoman for Credit Suisse said the bank hasn't been contacted by Italy's Guardia di Finanza.

While the motivation behind the crackdown is to ensure Swiss banks pay Italian taxes, the data could be passed on to prosecutors, says Paolo Bernasconi, a lawyer in Lugano, Switzerland. The Guardia di Finanza also ratcheted up pressure by demanding a response within 20 days of sending the questionnaire at the end of January.

“Could a lack of response be considered as an indication of an infraction, leading to the opening of fiscal proceedings, or even criminal proceedings?” Bernasconi, a former Ticino prosecutor, said.

Italian authorities got about 20 billion euros ($22.7 billion) in 2017 from cracking down on evasion, a 5.6 percent increase from a year earlier, in part from a tax amnesty the government offered to encourage citizens to repatriate money stashed abroad.

Lugano, in the Italian-speaking Swiss canton of Ticino, became Switzerland's third-largest financial hub by catering to wealthy Italians but has seen its number of banks drop by more than 40 percent over the past decade amid an Italian crackdown on tax evasion.

But one lawyer warned that Swiss banks should be careful not to get swept up in Italian politics and populist pledges to crackdown on wealthy elites.

“I hope Swiss banks are not so stupid as to disclose information they are not obliged to disclose,” says Enzo Caputo, a Zurich lawyer at Swiss-Banking-Lawyers.com. “Any information they are disclosing will be used against the Swiss banks and their employees.”

Italian prosecutors have demonstrated their willingness to pursue Swiss bankers they believe have broken the law. As many as 18 managers at Switzerland's PKB Privatbank AG are under investigation for allegedly helping clients hide 409 million euros from tax authorities, according to local media reports. A spokesman for Lugano-based PKB said the number of managers facing investigation is closer to half the 18 reported by Italian media but said he could not give an exact number. PKB, he added, hasn't received the questionnaire.

--With assistance from Lorenzo Totaro.

To contact the reporters on this story: Hugo Miller in Geneva at hugomiller@bloomberg.net;Jan-Henrik Förster in Zurich at jforster20@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, ;Dale Crofts at dcrofts@bloomberg.net, Christopher Elser

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