A whistleblower has information leak over $100 billion held in 30,000 accounts at Zurich-headquartered Credit Suisse, one of the world’s most iconic banks – much of which is suspected to be dirty money from human rights abuses, fraudsters and businessmen who have been subjected to international sanctions.
The database was given to the German newspaper Sueddeutsche Zeitung, which shared it with the Organized Crime and Corruption Reporting Project and 46 other news publications, including The New York Times, The Guardian and Le Monde.
The investigation has refocused attention on Swiss banks and their famous century-old culture of secrecy which is under pressure as countries around the world try to get their super-rich to pay legitimate taxes on their wealth.
centuries of secrecy
Since at least the early 18th century, Geneva had become a favored destination for French royalty and other European elites seeking discreet havens to hide their wealth, and in 1713 Swiss government authorities announced laws prohibiting bankers to give information about their customers. Thus began a powerful culture of silence and secrecy that has become the defining characteristic of Swiss banking.
In 1934, Switzerland passed the Federal Law on Banks and Savings Banks, commonly referred to as the 1934 Banking Law or Swiss Banking Law. The most well-known part of the law, Section 47, makes it a crime to reveal customer details or information to almost anyone – including the government – without their consent and in the absence of criminal complaint. Offenders can face up to five years in prison; Section 47 is at the heart of some of the strictest bank secrecy laws.
As wealth became easily mobile across international borders, the security and stability of Swiss banks, located in a country that was peaceful, politically neutral and committed to secrecy, held an irresistible appeal to the super-rich and others who don’t. did not want to answer questions about the sources of their wealth. Representations in films have created popular images of long tunnels leading to underground vaults and bank officials with an unwavering reputation for customer confidentiality. James Bond’s dialogue in The World is Not Enough (1999) is often quoted: “If you can’t trust a Swiss banker, where is the world?
Safe and easy banking
Swiss bank accounts are attractive to depositors because they combine low levels of risk with very high levels of confidentiality. The Swiss economy is extremely stable and the banks are managed with a very high level of professionalism.
Almost any adult in the world can open an account at a Swiss bank. Opening an account is not difficult and does not require much more than basic KYC, including proof of identity such as a passport. A minimum balance is required, which varies by account type and from bank to bank.
International customers are essential for Swiss banks and for the Swiss economy as a whole. The Guardian reported that almost half of the 7.9 trillion Swiss francs ($8.59 trillion) in assets under management in Switzerland belong to foreign clients. The banking sector contributes one-tenth of Switzerland’s GDP and a similar share of the country’s jobs. There are more than 240 banks in the country, but Credit Suisse and UBS control around 50% of all banking assets, The Guardian said.
Question of “black money”
The “black money” allegedly hidden by Indians in Swiss banks is a political problem in India, and political parties and officials have often promised to “bring it back”. Swiss authorities have said they are cooperating with the Indian government to fight tax evasion and evasion.
The two countries have had an automatic exchange of tax information system since 2018, under which detailed financial information on all Indian residents with accounts in Swiss financial institutions was provided to the authorities for the first time. Indians in September 2019.
Newsletter | Click to get the best explainers of the day delivered to your inbox