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)