The Swiss Federal Council has approved an amendment to the country’s double taxation agreement with the US, after two Swiss banks have had to contact clients recently to inform them their details have been subject to an administrative assistance request by the Internal Revenue Service.

The amendment strengthens the procedural rights of people domiciled in the US in cases where administrative assistance is based on “certain patterns of behaviour”, the Federal Council said. When contacted by WealthBriefing, the Swiss authorities were unable to clarify at this time what this term means exactly.

The amendment gives people the same procedural rights in these cases (where the assistance is based on certain patterns of behaviour) as in all other cases.

Anyone affected by an administrative assistance request to the Swiss government is entitled to be involved in the procedure under the 1996 tax treaty. This means that if a person is domiciled abroad, he or she will be contacted by the institution holding his or her information (such as a bank). If the bank can’t reach a client in this case, the client will be contacted by the relevant US authorities.

However, when such requests were previously based on “certain patterns of behaviour”, the same procedural rights did not apply. This means that someone’s details could be disclosed to the US side, without that person having the chance to assert their rights in Switzerland first.

Essentially the authorities are trying to ensure that all people subject to an administrative assistance request are aware of it.

In light of the recent Credit Suisse and Clariden Leu cases, the Federal Council said in an emailed comment to this publication that this amendment was “aimed at bank clients, whose name and address actually nobody knows and have nevertheless the right to be informed that they are affected by an administrative assistance request.”

As reported here, Credit Suisse started earlier this month to notify some US clients suspected of offshore tax evasion that it intends to hand their names to the Internal Revenue Service, with the help of Swiss tax authorities. It later emerged that Clariden Leu, which is part of Credit Suisse, would also be contacting clients under the same circumstances.

In related news, Credit Suisse recently announced it is fully integrating Clariden Leu into its private bank.