It's time for America to move on from the Gnomes of Zurich

Swiss Switzerland FlagHarold Cunningham/Getty ImagesA flag thrower looks on as alphorn players prepare to perform on July 28, 2013 in Nendaz, Switzerland. The Swiss folkloric wooden wind instrument was used in most mountainous regions of Europe by mountain dwellers as signal instruments.

In 2007 Bradley Birkenfeld, an American employed by UBS, approached officials in Washington.

His revelations about the bank’s surreptitious servicing of thousands of rich, tax-dodging Americans started a war on Swiss moneymen.

Eight brutal years later, far from being over, it has become bogged down. Some large banks, including UBS and Credit Suisse, have been punished. But America is refusing to strike deals with several others until a programme to penalise dozens of smaller banks has run its course–and this is behind schedule.

One reason is that Washington has asked for far more information from these small fry than it originally said it would. To some, this looks like overkill. The deterrent effect of continuing to act tough in Switzerland is minimal, says a lawyer who has worked on Swiss tax cases, since for any Swiss banker to carry on as before would “border on reckless”.

And the continued focus on Switzerland suits tax havens elsewhere, which might otherwise attract more attention from American prosecutors.

America’s battle against individual Swiss bankers, meanwhile, has been inconsistently fought, with some big losses along the way. The biggest potential scalp, Raoul Weil, formerly the head of wealth management at UBS, walked free last year after a trial in Florida.

One of his former right-hand men, Martin Liechti, received a non-prosecution agreement–despite being described in court filings by Mr Birkenfeld’s lawyers as the “chief architect, orchestrator and director of the entire UBS fraud committed against the United States”. (Mr Liechti denied this, but testified at the trial in Florida that UBS was aware some clients were not tax-compliant.)

Not all his underlings were treated so gently. One spent three years in an American prison and, though he later received a hefty reward from the IRS for blowing the whistle, remains on supervised release. His name? Bradley Birkenfeld.

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