Swiss Offshore Banking
Swiss offshore banking has a solid reputation due to its long history as a centre for wealth management, asset protection, tax-advantaged investment and of course bank secrecy.
Its bankers are regarded as some of the most trustworthy and experienced in the world.
It also has some of the strictest bank secrecy laws. These provide that anyone who divulges personal banking information without the permission of a court faces fines and a jail sentence. Bank secrecy should not be lifted in cases of tax evasion (e.g.non-reporting), only in those of tax fraud (e.g. willfully forged documents). However it is up to a judge to decide on a case by case basis into which category a dispute falls.
Swiss Bank Secrecy Law
Swiss bank secrecy has existed since 1934, when the custom of client confidentiality was written into the legal code by the Swiss Banking Act. Under the principle of bank secrecy, privacy is statutorily enforced, with Swiss law strictly limiting any information shared with third parties, including tax authorities, foreign governments or even Swiss authorities, except when requested by a Swiss judge's subpoena.
However Swiss bank secrecy is not enforced in cases such as divorce or bankruptcy, where information regarding account details may be legally obtained. In other criminal matters such as money laundering and terrorism bank secrecy may also be breached.
EU Savings Tax Directive
Switzerland is part of the EU Savings Tax Directive, which requires overseas savings interest to be declared among participant countries. Foreign Swiss account holders who are affected by this law (EU nationals) have the choice of declaring their offshore bank account or letting their Swiss bank deduct a 35% withholding tax at source. These taxes are then redistributed by the Swiss government, leaving privacy intact.
Numbered Accounts
Numbered accounts are those which carry a number rather than name to identify the account holder when transactions are made. In June 2004 anti-money laundering laws came into effect which spelled the end of these accounts in their traditional format. These bank accounts now require complete identification – Swiss banks must complete due diligence on all their clients.
Wealth Management and Portfolio Management
It is not easy to get a Swiss bank account with a private Swiss banker. These accounts will start at around 1,000,000 USD, and you must turn up in Switzerland in person to open one. If you have a substantial amount to invest you may even get a managed portfolio where your own private banker manages your funds according to your instructions or guidelines to balance risk, security and liquidity with maximum returns. The availablity of telephone or internet offshore banking services will depend on the swiss private bank.
Concerns over the Safety of Swiss Offshore Banking
Swiss bank accounts and Swiss offshore banking have made headlines over the undeclared accounts of US citizens held at global banks UBS and Credit Suisse. The Swiss government has allowed bank secrecy to be pierced in a small number of cases judged to be tax fraud.
These banks made it possible for such problems to occur by opening offshore banking units or US branches and thus making themselves subject to US law. As a result accounts at large banks such as these with branches in your home country are not viable options if you are looking for confidential offshore banking. Swiss bank secrecy still applies absolutely to Swiss banks that limit their operations to the borders of Switzerland and in these there has been no operational change. Those who break bank secrecy will go to jail and the banks may be sued for compensation.
Another concern has been the news that the CIA and US Treasury Dept have tapped the SWIFT system that is used for clearing international financial transactions, seriously compromising bank secrecy in offshore banking centers. The US government cannot legally use this information but the knowledge that they have it does not inspire confidence.
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