Credit Suisse Canada contests court decision ordering
disclosure of clients' affairs
22 November 2010
The Canada Revenue Agency has obtained a
federal court order instructing Swiss bank Credit Suisse to hand
over historical records of its private banking clients.
Credit Suisse has lodged an application to
revoke the order, which requires the bank to hand over an estimated
500 boxes of records dating from before 1998.
The CRA obtained the court order by quoting an
anonymous Canadian resident. This "Taxpayer X" says that in 1993 he
was advised to transfer $200,000 to Switzerland via Credit Suisse's
Vancouver office, and thus avoid paying Canadian tax.
Although the agency does not have any evidence
of tax evasion by any identifiable clients of Credit Suisse, X's
evidence persuaded the court to order Credit Suisse Canada to
disclose all records of all its former private banking clients of
its Toronto, Montreal and Vancouver offices.
Credit Suisse's request for nullification of
the order was filed last week in a Toronto court. It says the
"inordinately broad" court order breaches its clients' personal and
financial privacy interests.
The bank alleges that the legal conditions
allowing CRA to issue such a blanket request (called an "unnamed
person requirement") have not been satisfied, the allegations being
based "solely on the purported activities of one individual in
1993, acting at the direction of a third party". Credit Suisse also
points out that it sold the relevant businesses in 1998.
However several such court orders have been
issued by the Canadian courts, including one against the
Quebec-based bank Financiere Banque Nationale Inc in April
2010.
It is also known that CRA officials tried
without success to obtain such an order against UBS's Canadian
subsidiary in 2009, while the US tax authorities were pursuing UBS
through the courts.
Sources
Globe & Mail
CBC News
Toronto
Sun
CBC (CRA
affidavit requesting court order against Credit Suisse - PDF
file)