End of Banking Secrecy for Switzerland?

"Many bank directors are unable to leave Switzerland because they risk being arrested.”

The storm sweeping through the Swiss banking sector can also have terrible consequences for those not directly involved. In August, the two teenage sons of a Geneva banker who flew to the US on holiday were detained by customs officials on arrival and grilled about their father’s activities.

“Today we’re paying the price. But it’s not just those who were responsible in the past who are paying for it, but the new generation as well; they are losing their jobs and suffering from the impact of the crisis.”

Not so long ago, bank directors and politicians claimed that banking secrecy was “not negotiable”. But they underestimated the speed with which attitudes were changing in the international fight against tax evasion.

In 2009 when the G20 and the Organisation for Economic Co-operation and Development (OECD) officially took up the battle against banking secrecy, Switzerland was placed on a grey list of countries accused of not cooperating on tax matters. 

Under pressure from the US, the Swiss were also forced to hand over data on thousands of clients of Swiss banks to American authorities.

To avoid the automatic exchange of tax information, which would effectively mean the end of banking secrecy, the government is currently pursuing a new path – negotiating bilateral tax treaties, known as Rubik accords, with interested countries.

Bilateral tax agreements have already been signed with Germany, Britain and Austria. Switzerland has agreed to levy a punitive retroactive tax on undeclared capital to regularize the past and apply a withholding tax to future interest income from those accounts.

But right-of-centre Swiss parties have launched a referendum against the three Rubik treaties already signed.

These tax agreements serve as a guaranteed amnesty for Swiss bankers who today can no longer risk leaving Switzerland.