The Swiss government said Friday it would cooperate on cases of international tax evasion, breaking with a long-standing tradition of protecting wealthy foreigners accused of hiding billions of dollars in the Alpine nation.

The government insisted it would hold onto its cherished banking secrecy rules, but said other countries could now expect Swiss cooperation in cases where they provide compelling evidence of tax evasion.

“We want assistance to be restricted to individual cases to prevent fishing expeditions,” President Hans-Rudolf Merz told a news conference, referring to the practice of seeking information about many individuals in the hope of discovering a few tax evaders.

A number of countries are hoping to avoid being blacklisted by world powers when they meet in April to discuss stepping up their fight against tax cheats.

Austria and Luxembourg also said Friday they would step up cooperation on tax probes. But the greatest pressure has been on Switzerland, which is embroiled in a dispute with the United States over wealthy Americans that have stashed money in its biggest bank, UBS AG.

Swiss authorities have provided the U.S. with the bank details of up to 300 wealthy Americans suspected of tax fraud, but refuse to identify about 50,000 more U.S. account holders Washington wants.

The bank, and the government, have said further cooperation would violate Swiss law, which makes an unclear distinction between the serious crime of tax fraud and the minor offense of tax evasion.

Merz said the country — which already works with other countries to fight terror financing and return dictator cash — will now adopt standards set by the Paris-based Organization for Economic Cooperation and Development for countries working together against tax evasion. Switzerland had refused to commit to the standards since they were written in 2000 for fear of compromising banking secrecy rules.

“Banking secrecy does not protect tax crimes,” Merz said. The change, he added, “will increase the acceptance of the (Swiss) financial center and give customers greater confidence” and safeguard jobs in a sector that employs tens of thousands of people in Switzerland.

He said, however, that Switzerland will maintain banking confidentiality for clients unless foreign governments produce concrete evidence of tax evasion. Switzerland’s new cooperation will come into force after agreements with other governments that provide Swiss banks with new financial opportunities, he added.

Merz’s announcement came a day after Switzerland’s tiny neighbor Liechtenstein bowed to outside pressure by adopting the standards in a similar attempt to shed its label as a tax haven where foreigners can safely hide their money. Several others tax havens — including Andorra, Bermuda and the islands of Jersey and Guernsey in the English Channel — also have signaled over the past month that they would open their books to foreign tax inspectors.

Switzerland has been struggling to come up with a strategy for preserving banking secrecy while satisfying the demands of the United States, France, Germany and other foreign governments looking to crack down on tax evaders. The confidentiality of bank accounts is a sacred cow in the country, comparable to its long-standing neutrality, and has helped the country become one of the world’s richest.

Swiss bank vaults hold an estimated $2 trillion of foreign money.

The Swiss Bankers Association said it supported the decision, but now wants “an end to all improper international criticism of Switzerland and its legal system, and also an end to threats to put Switzerland on a so-called ‘black list.'”

The industry group said it expects all agreements to refrain from retroactively punishing banks or clients for old infractions.

Shares in UBS AG and Credit Suisse Group rose on the announcement and were both up over 5 percent for the day.

The Swiss government also said Friday it would take part in a U.S. civil case against UBS, which is being accused of facilitating massive tax evasion by wealthy Americans. The Swiss will protect their “sovereign interests,” according to a statement.

The UBS case represents the most serious crisis in the Swiss banking community since the uproar in the 1990s over Jewish accounts left unclaimed after World War II. After reacting slowly, Swiss banks eventually agreed on a $1.25 billion out-of-court settlement with the descendants of Holocaust survivors.

Switzerland passed its banking secrecy laws in 1934 during a worldwide depression and under the threat of espionage by France and Nazi Germany, which aggressively courted Swiss bank employees to divulge the names and data of customers. Strict penalties were imposed for violating bank confidentiality.

Still, secrecy standards have eroded.

Switzerland has retooled the rules over the past two decades to make it easier for poor countries to reclaim assets stashed in Swiss banks by their former dictators, and has become a world leader in returning potentate cash.

And after the 2001 terrorist attacks on the United States, the neutral country took a key role to freeze assets and investigate suspected financiers of global terrorism.

(Source: Associated Press)