Swiss Offshore Banking Demystified
Swiss offshore banking has a solid reputation due to its long history as a centre for wealth management, asset protection, tax-advantaged investment and of course bank secrecy.
Its bankers are regarded as some of the most trustworthy and experienced in the world.
It also has some of the strictest bank secrecy laws. These state that someone who shares someone’s private financial information without a court order are subject to fines and jail time. Bank secrecy should not be lifted in cases of tax evasion (e.g.non-reporting), only in those of tax fraud (e.g. willfully forged documents). However it is up to a judge to decide on a case by case basis into which category a dispute falls.
Swiss Bank Secrecy Law
Swiss bank secrecy has existed since 1934, when the custom of client confidentiality was written into the legal code by the Swiss Banking Act. Banking secrecy principles include statutorily enforced privacy. The Swiss law strictly prohibts sharing others’ information with third parties, including the tax man, governments, or even the authorities in Switzerland themselves, with the exception of when requested (via subpoena) by a Swiss judge.
But, banking secrecy in Switzerland will not be upheld in bankruptcy or divorce cases where legal requests for information will be honored. In other criminal matters such as money laundering and terrorism bank secrecy may also be breached.
EU Savings Tax Directive
Switzerland is part of the EU Savings Tax Directive, which requires overseas savings interest to be declared among participant countries. Foreign Swiss account holders who are affected by this law (EU nationals) have the choice of declaring their offshore bank account or letting their Swiss bank deduct a 35% withholding tax at source. These taxes are then redistributed by the Swiss government, leaving privacy intact.
Numbered Accounts
Numbered accounts are those which carry a number rather than name to identify the account holder when transactions are made. In early summer of 2004 “AML”, or anti-money laundering laws were enacted that effectively ended these accounts, at least as they had been previously organized. These bank accounts now require complete identification b?? Banks in Switzerland are required to adhere to “know you customer” KYC rules as laid out in Basel II and complete all necessary due diligence on their prospective clients.
Wealth Management and Portfolio Management
It is not easy to get a Swiss bank account with a private Swiss banker. These accounts will start at around 500,000 USD, and you must turn up in Switzerland in person to open one. If you have a substantial amount to invest you may even get a managed portfolio where your own private banker manages your funds according to your instructions or guidelines to balance risk, security and liquidity with maximum returns.
Concerns over the Safety of Swiss Offshore Banking
Swiss bank accounts and Swiss offshore banking have made headlines over the undeclared accounts of US citizens held at global banks UBS and Credit Suisse. The Swiss government has allowed bank secrecy to be pierced in a small number of cases judged to be tax fraud.
These banks made it possible for such problems to occur by opening branches in the US and thus making themselves subject to US law. As a result accounts at large banks such as these with branches in your home country are not viable options if you are looking for confidential offshore banking. Swiss bank secrecy is still completely applicabel to those banks which have been wise enough to limit their exposure to the borders of Swizterland, and in such cases there is no change. People that violate the bank secrecy laws face imprisonment, and banks are liable for damages.
Another concern have been the persistent rumors that the Central Intelligence Agency and United States Treasury have tapped into the SWIFT, or interbank electronic network used for clearing international financial transactions, seriously compromising bank secrecy. Of coure, any information obtained in such a covert manner could not be used in a court of law, however, the fact that this information may be exposed has been very concerning to privacy experts and those concerned with the growth and overreach of governments.
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