Tuesday, June 18, 2013

What's in a name?

Should one refer to banking privacy or banking secrecy? One sounds rather attractive, the other evil, anti-communitarian, defiant and generally a bad thing. That is, of course, why the Swiss banking rules about clients' privacy are consistently described as banking secrecy, particularly when the industry and the country is being bullied by the United States and probably quite soon the European Union in the name of its members, who feel that people should not try to take money out of the various governments' rapacious hands.

For the time being, the Swiss are holding out and one cannot help wondering whether recent scandals around certain US institutions, such as the IRS, have not stiffened their resolve.

The news is that the lower house of the Swiss Parliament has "refused to debate a bill that would allow Swiss banks to pass client information to the US tax authorities". The Bill will now return to the Senate who had reluctantly passed it, after threats from the US that it "would indict Swiss banks, and possibly even cut them off from the dollar market" if its parliament disobeys instructions. The Swiss parliament will be rising this week for summer, so the Bill will not be discussed till the next session. If the lower house refuses to debate it again, it will die an unnatural death.

What then?
In January Switzerland's oldest private bank, Wegelin, closed after being indicted and fined $58m by the US authorities after admitting in court to helping American customers to hide more than $1.2bn from the Internal Revenue Service.

In 2009, Swiss bank UBS paid $780 million and handed over details of more than 4,000 accounts in order to avoid indictment.
That would be the Internal Revenue Service that is waging a losing fight to clear its own name and for whose abolition there are ever more calls in the United States. Let us not forget the European Union that is standing in the shadows, hoping to get a piece of the action.


  1. In years past I have considered emigrating to the USA. It has to be said that the IRS (as well as their immigration system) was always at the top of the list of reasons NOT to go there.

  2. Th net is closing I'm afraid. The US Government is a great fan of extra territoriality, that is making it's own laws apply in foreign countries, as the Nat West three discovered. AIUI American citizens are still liable for US tax wherever they live in the World, and wherever their income comes from. The only escape is to renounce your citizenship. Of course this does mean they need to co-opt the rest of the World as their informers in order to be able to enforce this, and as we have seen they will adopt bully boy tactics to do this.

    I don't support tax evasion so this is a difficult area, and in the public perception the shadow of Nazi gold hoards still looms large over the Swiss banks.