The International Herald Tribune reports that:

Swiss banks cannot be expected to police foreign clients' tax affairs, one of the country's top banking officials said Monday, rejecting German demands for greater cooperation to catch tax evaders.

The president of the Swiss Bankers Association laid the blame for tax evasion squarely at the feet of governments that demand too much of their citizens' income.

"Countries which worry about tax evasion of their citizens should have a good think about the way they tax their people," Pierre Mirabaud told journalists in Geneva.

The arrogance of this claim is quite staggering. Switzerland doesn't need to 'police' foreign bank accounts held by EU citizens. It needs to do just two things.

The first is to file a suspicious transaction report with regard to any and every account covered by the current EU Savings Tax Directive arrangements where the account holder asks that information be withheld from their home country and that tax be deducted at source instead. This will, almost certainly, be because tax is being evaded somewhere. Because every banker must know this they must have suspicion that it is true and as such are legally bound to report the suspicion. This, in my opinion, is the inevitable consequence of the EU STD. The information should then be supplied in bulk to the states involved.

Second, they should allow the extension of the EU STD to private companies, trusts and all similar such arrangements with a beneficial owner or beneficiary in an EU state. Then they should apply the arrangement noted above, for exactly the same reasons.

Then, and only then, could they be sure of two things. The first is that they are acting legally with regard to money laundering. The second is that only then will Switzerland be avoiding the charge of organised tax evasion.

Mirabaud said:

It's necessary to clearly show Germany and the European Union where their sphere of influence ends and where our sovereignty begins

He added:

Our members don't regard themselves as responsible for their clients' actions. We are not a tax authority and we are not a police authority.

Again, three issues arise. Germany's and the European Union's sphere of influence does extend into Swiss bank accounts. They are allowed to tax their citizens. Second, Swiss banks are, under money laundering rules, responsible for reporting money laundering through their banks, and so have direct responsibility for their use and, third, Swiss sovereignty cannot be used to directly undermine the tax system of another state as Mirabaud proposes.

Switzerland can protest on this issue, but its actions are increasingly looking to be criminal. The time may arrive for sanctions to be imposed, including the deduction of a withholding from all payments into the country. It might think it is sovereign, but at the end of the day sovereignty has to be respected, and Switzerland's might not be if it declares economic warfare on its neighbours. It's dangerously close to being seen to have done so.