On January 8, 2010, the Swiss Federal Administrative Court (“Bundesverwaltungsgericht”) published a decision that declared the transfer of banking data to U.S. law enforcement authorities by the Swiss bank UBS to be illegal. In late 2009, UBS transferred the data of over 300 customers suspected of evading U.S. taxes to the U.S. Department of Justice and Internal Revenue Service following an order issued by the Swiss Financial Market Supervisory Authority (“Finma”) pursuant to an agreement Finma reached with the U.S. authorities.
In its decision, dated January 5, the Court found that Finma overstepped its legal authority in ordering the data transfer. Although strictly speaking the Court’s decision was based on Swiss constitutional, administrative and banking secrecy law, rather than data protection law, the decision contains extensive discussion about the fact that the data transfer significantly impaired the customers’ privacy rights as guaranteed by the Swiss constitution and by human rights instruments to which Switzerland is a party. The Swiss government reportedly is considering whether to appeal the decision to the Swiss Supreme Court, and the decision could have important implications for demonstrating the legal difficulties of transferring personal data from Europe to U.S. law enforcement authorities. Lawyers acting for some of the defendants were also reportedly preparing to file criminal charges against UBS executives and Finma employees for transferring the data illegally.