Swiss banks lobby for get-out clause as end of bank secrecy nears
ZURICH: Switzerland’s private banks, used for decades by the world’s wealthy to hide money and avoid tax, are pushing for extra legal protection of client information that could halt a much-heralded exchange of data with dozens of countries.
The Alpine country is preparing to dismantle bank secrecy next year when it begins sending information about its customers’ accounts to foreign tax agencies.
But Switzerland’s multi- trilliondollar financial industry is seeking new safeguards to protect bank data against misuse that could expose clients to crimes such as kidnapping or blackmail.
“Data could be sold or used to put pressure on clients or their families,” said Yves Mirabaud, chairman of the Association of Swiss Private Banks and senior managing partner at Mirabaud, a Geneva-based private bank.
“I’m referring to countries where we’re not very sure that the democratic process is the same as ours, or where corruption is very high.” Wealthy clients have pulled tens of billions of dollars out of Swiss bank accounts because of a worldwide crackdown on tax evasion following the global financial crisis last decade.
That culminated in the Automatic Exchange of Information programme fostered by the Organisation for Economic Cooper- ation and Development (OECD), which aims to ensure that offshore accounts are known to authorities.
The participation of Switzerland, the world’s largest centre for overseas wealth, in the data exchange agreement was heralded at the time as a major breakthrough in ending tax avoidance.
Banks in Switzerland are ‘fully committed’ to implementing the Automatic Exchange of Information, said a spokeswoman for the Swiss Bankers Association, the main banking lobby.
But they are lobbying to add an ‘activation’ clause that means information would only be handed over to a country if two criteria are met – a level playing field with other financial centres, and an assurance the data will be used properly.
They say giving information to countries in regions such as South America or Africa, where data protection standards can be weak and corruption rife, risks it falling into the wrong hands.
In 2018 Switzerland is due to start swapping information with 38 foreign tax authorities, including all European Union countries, and with a further 41 from 2019. — Reuters