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UBS has finally succumbed to US pressure and will release the names of an unspecified number of American customers who may have committed tax fraud.

The US has been asking the Swiss bank to share client information since it indicted one of its executives for aiding tax fraud in November.

The US authorities have requested information on US-domiciled holders of Swiss-based accounts at UBS. Under Swiss law the bank cannot turn over Swiss-based client data to any foreign authorities. "Pursuant to a Switzerland-US treaty, these matters go through an administrative assistance process. The administrative assistance proceedings are a matter between the relevant domestic and foreign authorities and the UBS clients concerned, UBS is not a party to these proceedings," said a spokesperson for UBS.

This will not signal the end of Swiss banking secrecy laws. "Contrary to the idea conjured up in public discussions, banking secrecy is not absolutely valid. It is not there to protect cases of tax fraud," Peter Kurer, UBS chairman, is reported to have said.

Swiss law distinguishes between tax evasion and tax fraud. Tax fraud is considered a criminal matter and those involved cannot hide behind banking secrecy laws. "Banking secrecy is misunderstood," said Rolf Wüthrich, a senior tax partner at Vischer, a law firm in Switzerland. "It is not absolute secrecy and can be lifted to aid criminal proceedings."

The use of financial instruments to avoid paying tax is not considered a crime in Switzerland But there are rumours that the Swiss authorities may reach a settlement with the US authorities in their long-running investigations into alleged tax evasion in there. If the Swiss start lifting banking secrecy rules to aid investigations into tax evasion this would be a significant departure from their position now.

"UBS was running the risk of losing its banking licence. It was this threat of having its license revoked that prompted the bank to act," said Wüthrich.

However, others are not so sure. "I doubt that the US would have revoked UBS's banking license due to the size and stature of the bank. Although if the US authorities believed that UBS was one of the main culprits for the significant loss of tax revenues then it is possible," said an advisor who did not wish to be named.

About 19,000 US citizens have money in Swiss accounts. "It would be logistically impossible to go through all of the accounts held by US citizens," said Wüthrich.

"The US Department of Justice and the Securities and Exchange Commission (SEC) are examining UBS's conduct in relation to cross-border services provided to US-domiciled clients by UBS client advisors based in Switzerland. The Department of Justice is examining whether certain US clients sought, with the assistance of UBS client advisors, to evade their US tax obligations," said Byrne.

The US does not distinguish tax evasion and tax fraud as clearly as their Swiss counterparts. However, the Swiss government has the final say regarding the release of banking information to foreign authorities. At present, this will only be done where there have been allegations of criminal tax fraud and not tax evasion.

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