Are Swiss banks re­ally will­ing to lift the veil of se­crecy?

Khaleej Times - - OPINION -

Switzerland’s leg­endary bank se­crecy is sup­posed to come to an end in a cou­ple of months. Long the haven of choice for looted WWII funds, sus­pected cor­rup­tion money and wealthy tax dodgers, Swiss banks were pro­tected by a con­fi­den­tial­ity clause en­shrined in the coun­try’s con­sti­tu­tion in 1934. But the no­to­ri­ous bank­ing sys­tem is sched­uled to go trans­par­ent by Jan­uary 1, 2018 as Switzerland shares in­for­ma­tion with tax au­thor­i­ties from some 50 other coun­tries as well as the Euro­pean Union. Us­ing the global au­to­matic ex­change of in­for­ma­tion (AEOI) sys­tem put in place by the Or­ga­ni­za­tion for Eco­nomic Co­op­er­a­tion and De­vel­op­ment to fight tax eva­sion world­wide, Swiss banks are now sup­posed to pro­vide in­for­ma­tion they sys­tem­at­i­cally col­lected this year on ac­count hold­ers in­clud­ing in­di­vid­u­als and com­pa­nies.

Once home to an es­ti­mated one-third of the world’s hid­den money, Swiss banks have agreed to the dis­clo­sure af­ter decades of pow­er­ful pres­sure from a range of govern­ments. But as the sys­tem takes ef­fect, some ex­perts pre­fer a wait-and-see ap­proach.

Stu­art Gib­son, a for­mer crim­i­nal in­ves­ti­ga­tor for the US In­ter­nal Rev­enue Ser­vice and at­tor­ney at the Depart­ment of Jus­tice, won­ders how would a coun­try trans­form from be­ing the world leader in bank se­crecy to a leader in open­ness and trans­parency? The an­swer, he says, could be that it doesn’t. “You make it look like you’re co­op­er­at­ing, while your in­ter­nal in­sti­tu­tions — which few peo­ple out­side Switzerland fully un­der­stand — do ev­ery­thing in their power to main­tain their coun­try’s role in keep­ing se­cure the fi­nan­cial se­crets of oth­ers,” Gib­son wrote in a re­cent op-ed piece.

Oth­ers, how­ever, point to progress. Paolo Ber­nasconi, an at­tor­ney and part­ner in the law firm Ber­nasconi, Martinelli, Alippi and Part­ners in Lugano, Switzerland, says “any kind of vi­o­la­tion (of the AEOI) by banks will be pun­ished with a se­vere fine by the Swiss fis­cal au­thor­i­ties”.

Also pres­i­dent of Ethics and Com­pli­ance Switzerland based in Berne and a mem­ber of the board of Swiss Ex­perts on Eco­nomic Crime, Ber­nasconi says that while “fol­low­ing the banks as they pre­pare ex­e­cu­tion of their AEOI du­ties, I have the im­pres­sion that they will com­ply”.

Shoah his­to­rian Michele Sar­fatti, for­mer di­rec­tor of the CDEC Foun­da­tion in Mi­lan and mem­ber of the Anselmi Com­mis­sion that in­ves­ti­gated as­sets con­fis­cated by fas­cist au­thor­i­ties un­der Mus­solini-era racial laws, says he has seen that Swiss banks are ca­pa­ble of full dis­clo­sure. “Twenty years ago un­der mount­ing in­ter­na­tional pres­sure, Swiss banks pub­lished a list of dor­mant WWII-era ac­counts that in­cluded the as­sets of Holo­caust vic­tims. The list was in news­pa­pers around the world and on the in­ter­net as well,” says Sar­fatti. “I be­lieve all the loose ends are tied up. There are no out­stand­ing mat­ters, at least in Italy.”

Yet the se­crecy saga con­tin­ued this year when Dutch tax au­thor­i­ties led a five-na­tion coali­tion ef­fort in­volv­ing 55,000 sus­pect ac­counts and the seizure of mil­lions of eu­ros in cash, gold, jew­ellery, real es­tate and paint­ings. Raids on homes and of­fices across the Netherlands and France were the re­sult of an in­ves­ti­ga­tion into tax­pay­ers and high-rank­ing bank em­ploy­ees in Bri­tain, Ger­many and Aus­tralia.

Dutch prose­cu­tors said they re­ceived a tip-off on as­sets hid­den in “off­shore ac­counts and poli­cies” es­ti­mated in the mil­lions of eu­ros. They say the in­for­ma­tion con­cerned a sin­gle Swiss bank they de­clined to name.

For its part, France an­nounced that 25 cus­toms agents car­ried out raids across the coun­try as part of an in­ves­ti­ga­tion into “ag­gra­vated money laun­der­ing and fi­nan­cial fraud” that be­gan last year. In­ves­ti­ga­tors said they found “sev­eral thou­sand” bank ac­counts opened in Switzerland by French tax­pay­ers who are sus­pected of hav­ing failed to de­clare them to the au­thor­i­ties.

In re­sponse, Swiss of­fi­cials protested the de­lib­er­ate de­ci­sion to keep them in the dark. “The Swiss pub­lic min­istry is stu­pe­fied by the man­ner in which this op­er­a­tion has been or­gan­ised so as to keep Switzerland de­lib­er­ately ex­cluded,”

Swiss banks have agreed to the dis­clo­sure af­ter decades of pow­er­ful pres­sure from a range of govern­ments

a gov­ern­ment spokesper­son said. “The pub­lic min­istry awaits a writ­ten ex­pla­na­tion from the Dutch au­thor­i­ties.”

Yet oth­ers won­der if some in Switzerland are even now work­ing to de­lib­er­ately ex­clude in­for­ma­tion. A pro­posed ref­er­en­dum to change the Swiss con­sti­tu­tion would fur­ther pro­tect bank­ing in­for­ma­tion on Swiss cit­i­zens. “The par­lia­ment’s de­ci­sions con­cern­ing the pop­u­lar ini­tia­tive still re­main com­pletely open,” says Ber­nasconi says. “Even if the ini­tia­tive is suc­cess­ful it will not im­pede Swiss fis­cal au­thor­i­ties from us­ing in­for­ma­tion gath­ered in (the AEOI process) from pros­e­cut­ing Swiss tax­pay­ers who vi­o­late their fis­cal du­ties.”

So far the im­pend­ing dis­clo­sure sys­tem does not ap­pear to have had a chill­ing ef­fect on Swiss bank de­posits, says Ber­nasconi. “The ex­e­cu­tion of the AEOI will have no detri­men­tal ef­fect on the global vol­ume of as­sets de­posited at Swiss banks,” he says. “With­drawal is not so easy due to the fact that it is quite dif­fi­cult to find safe coun­tries out­side of Switzerland.”

Of­ten de­picted as the gray char­ac­ters in spy thrillers, it re­mains to be seen if the denizens of Switzerland’s murky bank­ing world can thrive in the sun­light. If they can adapt, Ja­son Bourne will need to find a new drop box. Jon Van Housen and Mariella Radaelli are ed­i­tors at

the Lu­mi­nos­ity Italia news agency in Mi­lan

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