(Bloomberg) The Swiss government announced a new approach allowing banks to hand over data to U.S. authorities in a bid to solve a dispute over undeclared assets and forestall further indictments by the Department of Justice.

The government is proposing banks apply for individual authorization to surrender records intended to yield information on Americans who cheated on their taxes, Finance Minister Eveline Widmer-Schlumpf said in the capital, Bern, Wednesday.

The government took the step in a bid to shield more banks from being charged by the U.S. after Parliament last month voted down a bill that would have enabled the transfer and established more legal protection for bank employees. The decree, dubbed plan B by politicians, comes after Wegelin & Co. pleaded guilty in January to helping Americans dodge taxes.

“There possibly will be a large number of requests for permits” by banks, Widmer-Schlumpf told reporters. While “not everything will be able to be transmitted as planned” in the failed law, “we expect the large part of the program can be put into action,” she said.

Switzerland wants to prevent the indictment of another of the country’s banks. Wegelin, the oldest Swiss bank, was indicted last year after taking over clients from UBS AG. UBS avoided prosecution in 2009 by admitting it aided tax evasion, paying a fine of $780 million and handing over client names to the U.S.

Client Data
Client data isn’t covered by the authorization, according to the government. That information can only be handed over in response to a request for administrative assistance by the U.S. under existing double-taxation agreements, it said.

Switzerland is the biggest center for global offshore wealth with $2.2 trillion, or about 26 percent of the market, according to Boston Consulting Group.

The government has already issued similar authorizations for banks including Credit Suisse Group AG last year. The lender is among a group of at least 12 financial institutions already subject to a U.S. probe.

So-called leaver lists of clients who left for another Swiss bank can be transmitted as long as they don’t include any personalized data, Widmer-Schlumpf said.

Lawsuit Fear
This may not stop banks from handing over some data not covered by the government’s rules, Peter V. Kunz, a professor of comparative law at the University of Bern, said in an interview with Swiss public broadcaster SRF before the announcement.

“Should their existence be threatened banks would certainly consider violating Swiss law,” Kunz told SRF. “The fear of a U.S. lawsuit is too great.”

Parliament opposed the bill on the grounds it was a blank check to the U.S. and that lawmakers were left in the dark about the terms banks might face.

—With assistance from Giles Broom in Geneva and Elena Logutenkova in Zurich. Editors: Zoe Schneeweiss, Dylan Griffiths

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