Switzerland’s national flag flies beside a logo of Swiss bank Credit Suisse at its headquarters at the Paradeplatz square in Zurich, July 31, 2019. REUTERS/Arnd Wiegmann
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Switzerland’s national flag flies beside a logo of Swiss bank Credit Suisse at its headquarters at the Paradeplatz square in Zurich, July 31, 2019. REUTERS/Arnd Wiegmann
Switzerland’s Geneva, for some couple of hundred years, has been the favoured destination for French royalty and other European elites seeking discreet havens to stash their wealth.
The country back in 1934 passed the Federal Act on Banks and Savings Banks, commonly known as the Banking Law of 1934 or the Swiss Banking Act.
As per Article 47 of the law, it is a crime to reveal details or information of customers to almost anyone, including the government, without their consent and in the absence of a criminal complaint.
Violators of Article 47 – one of the most stringent banking secrecy laws in the world – can get five years of imprisonment.
Such facilities, over the years, made Switzerland a hotspot for tax-evaders and people who wish not to answer questions about sources of their wealth from around the world.
Marking a turning point, in May, 2014, over 50 countries signed a declaration prepared by the Organisation for Economic Co-operation and Development agreeing to a global exchange of information about their respective taxpayers’ financial information.
Switzerland also promised to share information about client bank accounts when sought.
A leak of Credit Suisse data, early this year, again triggered a debate around the banking laws of the Alpine country.
As per the leak earlier this year, the bank’s clients were involved in torture, drug trafficking and money laundering among other criminal activities.
Depositors find Swiss banks very attractive as they pose low to no risks with the best possible privacy out there. Also, the fact that these banks operate maintaining a very high level of professionalism and a very stable Swiss economy helps the cause even more.
Almost any adult in the world can open an account in a bank in Switzerland without much difficulty and the process requires not much more than basic KYC.
A valid form of identification, such as a passport, a minimum balance (varies with the type of account, and from bank to bank) and one is all set to go.
A report prepared by British daily The Guardian, wrote that almost half of the 7.9 trillion Swiss francs ($8.59 trillion) of assets under management in Switzerland belong to foreign clients and the banking industry contributes around a tenth of the country’s total GDP and jobs.
Swiss banks have been practising automatic exchange of information (AEOI) with their foreign counterparts since 2017 but Bangladesh is yet to be included in the list.
Amid the recent controversy stirred up by Ambassador of Switzerland to Bangladesh Nathalie Chuard, who at a DCAB Talk recently said that Bangladesh never asked for particular information or data of any Swiss bank account holders, Bangladesh Financial Intelligence Unit (BFIU) informed the High Court (HC) that details on the deposits of total 67 Bangladeshis, involved in alleged money laundering, was sought from the banks in Switzerland, but they only received one.
How AEOI works
According to the website of Swiss Bankers Association, with AEOI, information regarding cash and custody accounts held by customers in country A with a financial institution in country B is first reported by this financial institution to the national tax authority of country B.
The tax authority in country B then sends the information to the tax authority in country A, which compares it against the customers’ tax returns.
The flow of information between AEOI partner states is thus based on reciprocity, creating a global information-sharing network. The video below explains in detail how the process works.
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