Safe keeping: myths about Swiss banking secrets: how did sleepy Switzerland become a global financial powerhouse? Many reach for the argument that Swiss banking secrecy laws must have helped this wealthy nation carve out its niche. After a recent probe by the United States, pressure on Swiss banking secrecy is increasing just as the financial services sector attempts to secure its international standing. So, just what is banking secrecy?
| Auteur | Armitage, Tom |
| Fonction | BUSINESS |
Outdated images of German dentists with suitcases full of cash struggling down Zurich's Bahnhofstrasse no longer apply. And neither do stereotypes about shady criminals seeking to wash their filthy lucre through the Swiss banking system. Since the scandals of the late 1990s involving revelations about the role of Swiss banks during World War II, the Swiss banking industry has worked hard to bust the myths that have arisen about its special relationship with customers--not least the fact that it allegedly helps unscrupulous Europeans and Americans dodge taxes.
While Switzerland's banking industry has been 100 years in the making, the actual laws that govern banking secrecy are much younger. As the Swiss banking industry developed, customers' relations with bankers were based on the notion of client confidentiality--much the same as relationships with lawyers and doctors.
This unregulated understanding created a spirit of discretion that Swiss private banks try hard to maintain to this day. After the 1930s, this spirit of trust became enshrined in law, and ultimately in the Swiss constitution--a move that has always been controversial.
"Ever since the national law on banks and savings banks came into force, banking secrecy has been the subject of debate and the almost permanent target of attacks from within Switzerland as well as from other countries," says Robert Vogler in his 2006 study Swiss Banking Secrecy: Origins, Significance, Myth.
So what is it?
Perhaps the best source of information about banking secrecy is the banks themselves.
The Swiss Bankers' Association, which represents the interests of Swiss-based banks, has a glossary on its website designed to help children learn more about the industry. When you search for 'bank secrecy' (Bankgeheimnis in German) it appears next to their preferred expression 'bank client secrecy' (Bankkundengeheimnis).
"Bank client secrecy protects clients from inquisitive intrusions into the private sphere of his finances," the SBA's website reads. "Information about accounts, balances, customer relations and so forth may not be given out (even to tax authorities). However, confidentiality does not apply in the context of criminal activity."
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Banking secrecy--or client confidentiality, as Swiss bankers prefer to call it--protects customers to the extent that their actions do not constitute a crime under Swiss law. Any criminal activity, be it money laundering or fraud, would warrant...
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