(Reopens FGN18)

The FATCA law is controversial in many countries because it requires banks to reveal information about their clients. Until now, tax agreements have only provided for the exchange of information "on demand," meaning a country would already suspect possible tax evasion before requesting the information. FATCA meanwhile requires foreign financial institutions to report all assets in accounts held by US citizens to the IRS. In anticipation of these rules and the workload they will entail, critics say Swiss banks have already begun actively eliminating American clients. In light of this problem and to avoid trampling on Switzerland's cherished banking secrecy rules, a number of exceptions have meanwhile been negotiated under the deal signed in Bern. Social security funds, private pension funds and property and casualty insurers have been excluded from the Swiss FATCA filing requirements and bank compliance has been simplified, Bern said. The new deal also ensures that information will not be transferred automatically without the client's consent, although FATCA then requires banks to charge a 30-per cent withholding tax on the US client's assets. If a client refuses consent, information about their holdings can still be exchanged, but then only through group requests under an existing double taxation agreement between Switzerland and the United States, Bern said.(AFP) KAS 02141828 NNNN