The Ethics of Banking: Conclusions from the Financial Crisis (Issues ...

The Swiss “Banking Secret” 107
no more than vestiges of protection. It is particularly alarming that the US Internal
Revenue Service can penetrate banking secrecy in other countries to a degree that
would once have been unacceptable between sovereign nations and, indeed, viewed
as interference in the internal affairs of another country. German banks yield in obedience
to the USA on this issue, with a notable haste that can only be explained by
the ever-present threat of an American boycott of the banks’ business.
The dissent between the Swiss law on banking secrecy, on the one hand, and
German and American law, on the other, is rooted in the fact that Switzerland prioritizes
the customer’s interest in secrecy over the fiscal interest of the tax authorities,
whereas in Germany the fiscal interest is prioritized over the customer’s interest in
secrecy. However, the discrepancy in legal views between Switzerland and other
countries – it is important to emphasize – vanishes when it comes to the crucial
matter of whether banking secrecy takes pre-eminence over the interest of penal
prosecution in criminal trials. Even Swiss banking secrecy only applies up to the
point that no prosecutable offense has been detected and no criminal prosecution is
necessary.
It is best to start by mentioning the developments that make banking secrecy a
problem deserving of analysis in terms of economic ethics and business law. 5 In the
first place, the internationalization of the economy is a phenomenon that undoubtedly
makes it necessary to internationalize the investigation of tax evasion. If profits
are increasingly earned and hoarded abroad but losses from abroad are offset in the
domestic economy, the domestic tax authorities must be guaranteed a certain right of
access to the international operations of the domestic firms. This interest in internationalization
and harmonization of tax laws and investigation of tax evasion is valid
in all countries, because all countries – EU Member States as well as Switzerland –
are affected by the internationalization of the economy. The European Union, the
Council of Europe, the OECD and the United Nations have therefore called for
international tax evasion to be combated.
The second development that makes banking secrecy a problem can be seen in
the increase in dirty money in the world, and the consequent attempts to turn dirty
money into clean money by means of money laundering. As far back as 1992, for
instance, the annual turnover in the global drug trade had risen to DM 800 billion
(approx. EUR 400 billion). The annual profits of crime in the heroin trade alone
were estimated at DM 1.5 billion (approx. EUR 750 million). 6 The International
Monetary Fund (IMF) estimates that the money laundered worldwide amounts to
2–5% of the global economy.
Money laundering is the exchange or transfer of assets, in the knowledge that
these originate from criminal activity, for the purpose of masking their origin, and
with the intention that the perpetrators will escape the legal consequences of their
crime. 7
5 On Swiss banking secrecy, cf. also PETER,RUH,HÖHN (1981), Vols. I and II.
6 CAHL and KLOS (1993), p. 72.
7 Ibid., p. 76.