Consequences of violating bank customer secrecy all violations, whether intentional or resulting from negligence, are punishable. It has accelerated the transformation of the swiss banking industry from a system that relied on bank secrecy to a much more compliant one. On the contrary, bank customer secrecy contractually obliges swiss banks to uphold their customers right to reveal details about their financial situation at their own discretion. Although the federal law has only been amended seven times, it has been revised multiple times to limit and expand its banking secrecy provisions since its ratification. The rightwing swiss peoples party says it has gathered 80 percent of the 100,000 signatures required for a voter referendum in coming months to enshrine corporate secrecy in. Swiss banking has long been associated with professional, discreet, secure banking. After reading brads account, it is not only clear to me that he deserved every penny of the whistle blowing award but that we need so many more brad. In april 2009, g20 leaders took action to end the era of bank secrecy. Amendment to the bank secrecy act regulations requirement that insurance companies report suspicious transactions, notice of proposed rulemaking ladies and gentlemen. Switzerland financial secrecy index tax justice network.
The dummy company at the heart of deutsche bank money laundering probe by will fitzgibbon. This article traces the crucial phases of its development. Swiss banking secrecy and the problem of international cooperation. The international consortium of investigative journalists is a global network of more than 200 investigative journalists in 70. Swiss banks strictly adhered to the rigid restrictions of swiss banking law in total disregard of the special situation which had arisen out of the mass murder of the jews of europe. Those disclosing customer data in violation of this provision face criminal penalties see enforcement and penalties. Swiss banks tradition of secrecy clashes with quests. The first and most extensive part is dedicated to the exchange of customerrelated information between securities regulators by way of international administrative assistance, which is by far the most serious and urgent issue i. Swiss banking benefits, privacy, costs and account setup. According to the principle of bank secrecy, an employee of a bank or a credit institution who.
A global trend towards greater financial transparency has created pressure upon several countries with strict and longstanding bank secrecy laws, including switzerland and the philippines, two countries of focus in this note. Switzerland bank secrecy legal framework article 47 of the swiss federal act on banks and savings banks amended 2016 banking act, is the primary law governing bank secrecy in switzerland. Swiss bank account privacy laws provide world class asset. The untold story of how i destroyed swiss bank secrecy pimsleur swiss. Era of bank secrecy ends as swiss start sharing account data. Swiss banking privacy, security, tax savings and best tips. Birkenfeld is a retired investment professional and the most significant financial whistleblower in history. The tax evasion scandal and subsequent swiss concessions to the us had two important consequences for international tax cooperation. Switzerland has benefited from its image of political and economic stability, banking secrecy and low tax.
We examine the stock price reactions of four swiss banks to negotiations between switzerland and the european union and between switzerland and the united states to i obtain an estimate of the value of banking secrecy to swiss banks, and ii distinguish between tax evasion and genuine privacy concerns as sources of that value. Switzerland is a signatory to the foreign account tax compliance act, commonly known as fatca, which obligates swiss banks to reveal information about u. Switzerland has a long, kindred history of banking secrecy and client confidentiality. Violation of the bank secrecy is punished with up to 3 years of prison and by fines up to 250000 swiss francs. The origins of the swiss banking secrecy law and its repercussions for swiss federal policy for all its notoriety and controversial character, the history of swiss banking secrecy remains largely unexplored. First, the scandal provided a focal point for collective action that allowed other countries to coordinate their strategies and direct them against the country that had been identified as uncooperative. Economic effects strength of swiss franc, dawn of bank secrecy, negative interest impact swiss banks competitive position developments in the relationship with major economic jurisdictions will in. The reasons were fear of bank espionage especially from germany and france and the general uncertainty in the period after world war l. Deloitte research swiss banking business models of the future embarking to new horizons 7. For all its notoriety and controversial character, the history of swiss banking secrecy remains largely unexplored. Swiss banking secrecy nears end following new tax rules. Whistleblowing is not a new phenomenon in the swiss banking industry3, but it has increased. Swiss say goodbye to banking secrecy swi swissinfo.
It is supported by the federal constitution and the civil law. Banking secrecy waiver regarding investments in collective. The federal constitution of the swiss confederation and the swiss banking act. Swiss financial sector remains an important pillar of the. Individuals most commonly turn to swiss banks two reasons. Those disclosing customer data in violation of this provision. Although this may have attracted money into the swiss.
Swiss banking secrecy and the problem of international. Marie lamensch 5 1 introduction the development of swiss banking secrecy1 banking secrecy, broadly speaking, consists of keeping information concerning bank clients out of the reach of third parties, whether they are private or governmental. Its banking secrecy is targeted, in particular, by neighboring. Banking in switzerland dates to the early 18th century through switzerland s merchant trade and has, over the centuries, grown into a complex, regulated, and international industry. Bank customer secrecy is deeply embedded in swiss legal systems, including laws relating to basic rights of citizens and civil, criminal, banking and data. However, swiss banking secrecy has never been absolute. Nowadays, bank secrecy is regulated under the credit institutions act. Third, i discuss the literature on the first oecd campaign against tax havens and demonstrate that representatives of the swiss politicaleconomic system could. The banking secrecy provisions in the federal act are additionally. Imprisonment for up to six months or a fine of up to chf50,000 chf30,000 in the case of negligence. The swiss financial sector is performing well in the current challenging market environment.
Due to countryspecific variations in fatca implementation, forms for credit suisse clients with accounts booked in locations outside of switzerland may vary. Birkenfeld is a recommended account of how one man took on the swiss banking industry. Citigroups private bank in switzerland is asking clients to voluntarily waive banking secrecy and getting surprising responses, the u. Working his way up in the banking industry, bradley birkenfeld was a success. Swiss top court knocks down bid to extend banking secrecy. The case of swiss banking secrecy wiley online library. Swiss banking privacy and secrecy has been in force since as far back as banks can trace their origins, and officially codified as part of swiss laws, with severe criminal penalties for any violations, since the swiss banking law of 1934. Banking is seen as emblematic of switzerland, along with the swiss alps, swiss chocolate, watchmaking and mountaineering. The financial market legislation governing banks derives from one federal act, four federal council ordinances and one finma ordinance. Swiss banking secrecy formally developed in order to protect bank account holders from possibly intrusive prudential. Please note that the forms and documents provided on this site are intended solely for credit suisse clients with accounts booked in switzerland. In order to prevent criminals from abusing the bank client confidentiality law, an effective framework based on self. According to the principle of bank secrecy, an employee of a bank or a credit institution who has obtained information on the.
Despite this, the financial sector has still been able to expand its economic. Swiss banking secrecy has old and deep roots, based on three foundations. Under international pressure, swiss banking secrecy has weakened for years, meaning rich people from around the world can no longer easily use the alpine republic to hide wealth. Review article the politics of financial intransparency. Switzerland s highest court ruled on wednesday that prosecutors cannot extend swiss banking secrecy rules to all corners of the globe to pursue whistleblowers and other leakers at foreign. This law was enacted as a direct result of french socialistfervor pressure, and german nazi attempts at. It deals with operating licences and specifies rules for business conduct. Digitalisation of the sector requires substantial investment from companies. At the same time, low interest rates, persistent pressure on margins and the cost of necessary regulatory adjustments are squeezing profitability.
Swiss bank account privacy laws allow you to protect assets from seizure in switzerland s lowtax jurisdiction. Ba 1 dated 8 november 1934 version as at 1 january 2019. The untold story of how i destroyed swiss bank secrecy by bradley c. Banking secrecy waiver regarding investments in collective investment schemes investment funds and etfs the investment in a collective investment scheme like an investment fund or an etf hereinafter affected products requires the acceptation by you of the following banking secrecy waiver. Its famed banking secrecy laws are still functional though the move towards automatic. Foreign trading regulations waiver of banking secrecy. Based on this passport we will open a new bank account in switzerland taking advantage from the swiss banking secrecy legislation. Pdf the origins of the swiss banking secrecy law and its. Swiss bank secrecy and cloud legal opinion laux lawyers ag.
In the past, switzerland would only provide banking information if requested by a. Swiss banking secrecy withstood international criticism for several. The untold story of how i destroyed swiss bank secrecy pimsleur swiss german. Swiss banking secrecy for the customers protection when bank customer secrecy is lifted. Swiss banks also have a civil obligation to respect the confidentiality. The chapter first looks at the history and trajectory of swiss banking secrecy. A lifelong fan of the boston bruins, birkenfeld works with the team to help disadvantaged children, along with his other philanthropic endeavors. Banking secrecy 14 in finland bank secrecy has been a legal concept from the beginning of the 1970s. Tax evasion swiss say goodbye to banking secrecy this content was published on january 1, 2017 10.
Swiss banking business models of the future embarking to. I show that while swiss style banking secrecy is an important example of. It is a jurisdiction renown for its neutrality and adherence to the principles of banking confidentiality. The federal act on banks and savings banks is a swiss federal law and actofparliament that operates as the supreme law governing banking in switzerland. The banking act governs banks, private bankers and savings banks. In legal terms, banking secrecy is a professional secrecy obligation, like the medical secret. Banking secrecy is not an erratic block within the swiss legal system but rather an aspect of privacy protection, the latter being deeply rooted in our law and. Since bank customers have a right to privacy concerning their personal financial affairs, banks have a duty to keep confidential all facts that involve their. It reveals that the maintenance and reinforcement of banking secrecy. With regard to banking secrecy, the sba asks the following specific questions. Lucifers banker is a brilliantly written, nail biting and gripping story that unveils not only the dynamics of swiss banking secrecy but the greed and political shenanigans that plague our world. He lived and worked in switzerland as a private banker for the largest bank in the world, ubs. The origins of the swiss banking secrecy law and its.
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