Banking in Switzerland
Controversial protection of foreign accounts and assets during World War II sparked a series of proposed financial regulations seeking to limit bank secrecy, but with little resulting action.
[6] Since 1934 Swiss banking secrecy laws have been violated to a major extent by only four people, namely: Christoph Meili (1997), Bradley Birkenfeld (2007), Rudolf Elmer (2011) and Hervé Falciani (2014).
[7] As European countries began to increase taxes to finance the war, wealthy clients moved their holdings into Swiss accounts to avoid taxation.
[15] When Hitler announced an (aborted) invasion of Switzerland in 1940,[dubious – discuss] UBS contracted the Swiss Armed Forces to blockade their retail banks and transport Jewish assets to underground military bunkers.
[12] After the end of World War II, Switzerland and its financial system benefited greatly from having remained unharmed while all the neighbouring economies were devastated, but had to face the reputational damage from its support to the Axis powers, which also led to threats to banking secrecy as the Allied victors sought to expropriate Nazi assets held under Swiss custody.
By and large, the Swiss banking sector was able to successfully deflect the threat to its secrecy practices, not least as it supported France and the United Kingdom with significant lending.
[13] When British politician George Brown blamed "gnomes of Zurich" for a weak pound sterling in 1964, Swiss bankers began using the title as proof of their financial skill and adherence to secrecy.
[20] In late 2008, after an international, multi-state investigation into Switzerland's role in U.S. tax evasion, UBS entered into a limited, deferred prosecution agreement (DPA) with the U.S. Department of Justice.
[30][31] In January 2018, a U.S. district court ruled that Swiss bankers "[have] nothing to do with the choice that an American taxpayer makes to not declare offshore assets", later clarifying they should not be seen as facilitating tax evasion but rather provide a legal service that is made illegal by the client.
[47] Starting in 2019, Switzerland began to share (with the country of origin or residence) the details of 3.1 million bank accounts held by foreigners, as part of the agreed automatic exchange of information.
The IRS issues the entities unique Global Intermediary Identification Numbers, or GIINs, which relieve the banks of FATCA's requirement to investigate whether they're held by Americans.
[61] To improve the tracking down and freezing of assets, Swiss NGO Public Eye has called for a national task force, a register of the beneficial owners of front companies and a reporting obligation for lawyers.
[65] In addition, Transparency International is demanding that lawyers, financial advisors plus real estate and art transactions be subject to the same exacting anti-money laundering measures as banks.
[66] The "enabling industry" refers to lawyers, fiduciaries, notaries, and real estate agents who assist criminals in investing or hiding their ill-gotten wealth.
[78][79] Denounced as a criminal in Switzerland, a federal arrest warrant has been in place for Bradley Birkenfeld since 2008, after he disclosed UBS client information to the U.S. Internal Revenue Service in 2007.
[79] Despite an international push to meaningfully roll back banking secrecy laws in the country, Swiss political forces have minimized and reverted many of the proposed rollbacks.
[79][78] Swiss bankers who maintain offices exclusively in Switzerland are shielded from a foreign state's lawsuits, extradition requests, and criminal charges, as long as they remain within the country's legal jurisdiction.
[79] These secrecy laws have linked the Swiss banking system with individuals and institutions seeking to illegally evade taxes, hide assets, or generally commit financial crime.
[103] As of 2015, Swiss banking secrecy was considered "dead" because of FATCA, but according to the Tax Justice Network in 2018, these schemes are "full of loopholes and shortcomings" which can still be exploited by lawyers to hide the assets of their clients.
In 2022, the Helsinki Commission of the U.S. Congress stated:[106]Long known as a destination for war criminals and kleptocrats to stash their plunder, Switzerland is a leading enabler of Russian dictator Vladimir Putin and his cronies.
[119] Swiss banks have served as safe havens for the wealth of dictators, despots, mobsters, arms dealers, corrupt officials, and tax cheats of all kinds.
[120][121][122] Historically, mobster Meyer Lansky, Vatican-linked banker Licio Gelli of the lodge "P2" in Italy, Mexican president Carlos Salinas's family amongst others, have reportedly used Swiss banks to launder money over the years.
The ICIJ investigation also revealed that the husband of one of the Russian tax officials deposited millions in a Swiss bank account set up by one of the offshore companies.
[140] Over the past 20 years, Switzerland has returned about $2 billion of ill-gotten money in at least ten cases, including to Tunisia, Egypt, Brazil, Nigeria, Malaysia and Uzbekistan (2022).
[142] More recent studies show that Credit Suisse alone held assets worth $100 billion over several decades which were linked to corruption and bribery to drug and human trafficking for more than 30,000 clients.
[147] As of 2019, key criminal probes involving Swiss banks were the Petrobras bribery case, the Mozambique "tuna bonds", Credit Suisse "spygate" affair, Raiffeisen insider trading and UBS tax evasion in France.
[154] In 2021, UBS was criminally convicted by an appeals court in France for money laundering the proceeds of tax evasion by French citizens and fined €1.8 billion.
[7] As European countries began to increase taxes to finance the war, wealthy clients moved their holdings into Swiss accounts to avoid taxation.
According to official statements from the Swiss National Film Archives, inaccurate or exaggerated portrayals negatively impact Switzerland by reducing bankers to unflattering "caricatures" that are "ever disposed to accept funds from questionable sources".
[164] In 2014, Sindy Schmiegel, a spokeswoman for the Swiss Bankers Association (SBA), stressed that financial regulation in Switzerland is dramatically more strict than portrayed fictionally.
