december-2009

BIG DEBATE | SWISS BANKING
SHOULD
SWISS BANKING
LAWS BE
OVERHAULED?
YES
SAYS IAN WYLIE
I LOVE ZURICH. It’s one of my favourite
European cities. But there’s an odious
stench that lingers around the banking
quarters of Zürich and Geneva, and it isn’t
the Swiss cheese. Pecunia non olet – money
has no smell – goes the Latin saying. But
what really stinks is the willingness of
Swiss bankers to turn a blind eye to the
origins of the cash stashed in their vaults.
Is Switzerland happy with its reputation
as a place to put your money if you want to
dodge taxes or hide criminal dealings?
Swiss fi nancial institutions manage
around €1.3 trillion – more than a quarter
of all private foreign assets worldwide.
Much of it has been put there because of
96 | TRAVELLER | DECEMBER 09
the protection afforded by Swiss fi nancial
confi dentiality laws, fi rst passed in 1934.
Today, the cloak of secrecy still makes
Swiss banks hugely attractive. Banking
regulations have been the perfect vehicle
for international tax evasion, which
Swiss law does not consider a criminal
offence. But why should the Swiss profi t
from aiding foreign tax evaders? German
tax dodgers alone have around €300bn
stashed away in Swiss accounts, according
to the German Tax Union.
The US and European governments
have had to pay a lot of money to whistle
blowers so they would reveal the details
of citizens who keep their money in Swiss
banks instead of allowing it to be taxed
locally. But tax authorities’ investigations
should no longer end at the border.
Account details from Switzerland should
be made available via offi cial channels.
Tiny tears in the veil of secrecy are
beginning to appear. Earlier this year the
Swiss government agreed to negotiate
taxation agreements with a dozen
countries to avoid being blacklisted as a tax
haven by the Organisation for Economic
Cooperation and Development. Countries
such as Austria, Norway, Denmark and the
US have hammered out deals already.
But the small print of each treaty signed
has been very different. In some, the
Swiss have indicated they will hand over
information only if a request complies with
their own procedures. In others there is a
“grandfather clause” that allows them to
conceal all information about accounts or
investments made with them in the past.
If Switzerland thinks it can persist with
a legal system that criminalises tax fraud
but not tax evasion, it must be persuaded
to change its laws.
Swiss bankers say dirty money will only
fl ow to other havens like the Caribbean
and they worry that Switzerland’s fi nancial
industry will no longer have a competitive
advantage once secrecy is relaxed. “We will
need to work harder for our money in the
years to come,” said Boris Collardi, chief
executive of Swiss bank Julius Bär, at a
recent conference in Zürich. Two words,
Mr Collardi. Hard cheese.
Ian Wylie writes for The Financial
Times and the Guardian