Slashdot Mirror
Swiss Banks Making Concessions On Secrecy
Aryabhata writes in with news that should chill the hearts of evil dictators and tax cheats everywhere: one of the last bastions of strong banking secrecy, Switzerland, is bowing to international pressure and agreeing to cooperate with some foreign investigations of wrongdoing. "...the Swiss government announced on Friday that it would cooperate in international tax investigations, breaking with its long-standing tradition of protecting wealthy foreigners accused of hiding billions of dollars. Austria and Luxembourg also said they would help. ... The famed 'numbered accounts' that do not bear the owner's name will still be available for clients willing to pay for added anonymity. ... Over the past month, leaders have made similar promises in Singapore, Liechtenstein, Bermuda, the British islands of Jersey and Guernsey, and tiny Andorra... other 'offshore' banking centers are still available in the Caribbean, Panama, Dubai and elsewhere."
As possibly the only Swiss banker on Slashdot I should perhaps point out that:
- "numbered accounts" are a myth from James Bond movies. They do *not* exist. What is referred to as a "numbered account" is an account where the bank offers to send all communication without referencing the name of the client, as a way of preserving anonymity if the communication is intercepted/stolen
- ID requirements for opening a Swiss bank account today are *more* stringent than in EU. France is notably lax, which is a little ironic (you need to document not only who you are but *how* you got the money, and if there ever is a case where a bank fails to follow these guidelines, they can lose their banking license). Citizens of certain countries will find it nearly impossible to open an account in Switzerland as the level of documentation in their home country is not acceptable for opening a Swiss bank account.
- The Swiss distinguish between tax fraud (fabricating papers, forging signatures etc.) which is a criminal offense and where the bank will hand over information on your account, and tax evasion (failing to list all assets/income) which is *not* a criminal offense in Switzerland. The latter category they have now conceded to assist with on a case by case basis.
It is easy to misunderstand Swiss banking secrecy as some kind of dodgy way of assisting rich foreigners with tax fraud/evasion. In fact there is no difference between the rights of a wealthy foreigner and someone like me who (though not a Swiss national) has a job and get a regular salary in Switzerland. We all have the same rights.
To understand where all this comes from, one has to understand the very strong federal system of Switzerland. The Swiss "cantons" are almost as independent as separate states, with a weak and small central government. It boils down to this: the rights of the individual is valued much higher than the rights of the state. This is why the Swiss police cannot (nor the "IRS" or any other government entity) get my account information in Switzerland. This tilt of rights in favor of the individual versus the state also leads to a lot of other differences from most other countries, like that assisted suicide is legal in some cantons, including my canton of Zurich, liberal drug policies etc. In certain cantons you can actually negotiate your tax with the local cantons (who all have different tax rates) directly.
The Swiss Banks didn't respond to search warrants. That's what they're going to cooperate with in some cases from now on.
Numbered accounts do not exist - they are a James Bond myth. What we (I'm a Swiss banker) refer to as "numbered accounts" are accounts where the name of the account holder is not references in correspondence with he bank. The idea of accessing your account with only a number is a joke, considering that the Swiss have one of the strictest identification policies for opening and managing accounts in Europe (and thus probably the world). You not only need to ID yourself, but also prove where the money come from to the bank. (Certain countries have poor documentation standards for just about anything, and getting an account if you're from one of those is very very hard. You'd get it in Germany though, where they are more lax on their documentation (as is France), which is a little ironic...).
Like it or not, if you live/work in a country, you need to pay taxes there.
And as Americans, we get to pay taxes even if we don't live or work in the country too! Hooray!
It's ok, according to Misha Glenny, Dubai has taken the place of Switzerland as the preferred place for illicit money storage. In his book, he gives an example where a guy tried to transfer $3000 from a bank in Dubai, and they made him fill out a form. Very good record keeping. Except when he wanted to transfer $2 million euros, he did without any problem. He says, "If they ask too many questions, they won't get sales!"
Dubai of course isn't the only place, there are others, like Lichtenstein, and (at least in the 90s if you were Jewish) Israel. These are popular places for organized crime organizations to launder money. He says, "The only credible reasons for their growth and success is the fact that many corporations in the licit economy use them for the exact same reasons [as the criminals] (especially tax evasion). The government of the United States could force them to lift their banking secrecy codes overnight if they threatened to apply the same sanctions on offshore centers that they do on the onshore banks.......Without offshore banks it would not be only the mobsters finding it onerous to shuffle their money and companies around. Enron would have found it a lot harder too........"
Getting banks to be more open is a good thing in many ways.
Qxe4
The Swiss Banks didn't respond to search warrants. That's what they're going to cooperate with in some cases from now on.
The Swiss banks have always responded to search warrants issued by a Swiss court for things that are serious crimes in Switzerland (drug dealing, terrorism, money laundering, etc).
HOWEVER, tax evasion is not a crime in Switzerland. Which is one reason Swiss banks are so popular.