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

The Swiss “Banking Secret” 111
purposes, point to a development in the direction of lower tax rates, which is, however,
impeded by the immense increase in government borrowing due to the state
sureties needed by banks as well as economic stimulus packages in the aftermath of
the crisis in the financial markets.
The question of whether Swiss banking secrecy not only assists tax avoidance but
also connives with tax evasion takes on an entirely different nature when the issue is
not just a matter of different tax rates but the hoarding of illegally acquired, misappropriated
or stolen property, or an instance of tax evasion that is already on official
record as part of criminal proceedings in another country. If Switzerland allowed
banking secrecy to conceal the movement of such assets into Switzerland, it would
incriminate itself in receiving stolen property. Swiss law therefore waives banking
secrecy if criminal proceedings are in hand and if the foreign revenue authority can
prove that one of its citizens who holds an account in Switzerland has committed a
serious customs or tax fraud. In such cases, Switzerland does not insist on banking
secrecy to the detriment of the international prosecution interest. So it is only logical
that in cases of tax fraud, Switzerland provides mutual administrative and judicial
assistance to foreign states. 12
Swiss banking secrecy succeeds in striking a balance between the interest of
banking secrecy and that of allaying the suspicion of helping foreign accountholders
to evade taxation.
This is evident from the fact that, firstly, the Swiss banks withhold the same
data from their own fiscal authorities that they refuse to supply to foreign revenue
authorities. The Swiss authorities will not pass any bank data to a foreign
revenue authority that the banks are entitled to withhold from the Swiss revenue
authority.
Secondly, because of its neutrality, Switzerland does not cooperate in judicial
assistance in the investigation of offenses which it views as matters of political,
military or foreign-exchange law. There appears to be no objection in economic
ethics to this insistence on neutrality, even for offenses in tax law which arise from
political, military, or foreign-exchange offenses.
Thirdly, Switzerland does not provide mutual judicial assistance if the object of
the foreign proceedings is an act that breaches foreign tax, customs or currency
regulations or contravenes foreign trade or economic-policy provisions. Here, it is
less than clear whether the imperative of Swiss political neutrality really requires a
neutral stance toward all tax-law provisions of foreign countries. On the other hand,
nor is there any justification for waiving the imperative of neutrality on the grounds
of foreign tax, customs or currency regulations, since neither human dignity nor
overarching personality rights are affected.
The neutrality on questions of foreign tax, customs and currency law is counterbalanced
by Switzerland’s clear self-commitment to cooperate in mutual judicial
assistance in cases where the foreigner’s tax fraud represents an action that would
fit the same description under Swiss law. Nevertheless, in cases of tax fraud,
12 Ibid., p. 102.