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Privacy is a fundamental right to any
citizen, especially in money related matters. Secrecy is the
most important reason for Switzerland’s success as a center
of international finance.
Swiss banks and their staff are obligated
to keep all data, documents, all sorts of relationships
between bank and client, strictly private and confidential and
are bound to respect clients private matters. The obligation
to maintain banking secrecy applies to all those who are
employed by or are members of any part of a bank, as well as
to its auditors and the members of its board of directors. It
continues even after termination of their employment (Federal
Law on Banks and Savings Banks of 8 November 1934, Article
47). Any banker who divulges the private records of his
client, or a third party, may face a jail sentence or be
fined. Confidentiality is not, and has never been, absolute
because it does not protect criminals as Swiss banks consider
it to be of paramount importance for their financial center to
be free of criminal activities. Article 47 of the Federal Law
on Banks and Savings Banks, was enacted on 8 November 1934.
This article prohibits anyone who functions as an officer,
employee, mandatory, liquidator or commissioner of a bank, as
a representative of the Federal Banking Commission, or as an
officer or employee of a recognized auditing company, from
disclosing any information that a bank customer entrusts to
them in this capacity. Article 273 of Swiss Criminal Code
punishes responsible persons of breaking the law. The
convicted persons may face a jail sentence or fine up to CHF
30'000 or both.
Art. 273 2. Espionnage / Code pénal
suisse
Celui qui aura cherché à découvrir un
secret de fabrication ou d’affaires pour le rendre
accessible à un organisme officiel ou privé étranger, ou à
une entreprise privée étrangère, ou à leurs agents,
celui qui aura rendu accessible un secret
de fabrication ou d’affaires à un organisme officiel ou
privé étranger, ou à une entreprise privée étrangère, ou
à leurs agents,
sera puni de l’emprisonnement
ou, dans
les cas graves, de la réclusion. Le juge pourra en outre
prononcer l’amende.
[ Source : Swiss
Federal Administration ]
Purpose of Bank Secrecy
- Protect the bank customer's privacy in
their financial matters.
- Protect a customer's civil rights
under the Swiss Civil Code.
- Offer no protection for criminals or
illegally gained money.
Consequences of violating customer confidentiality
Anyone violating bank customer confidentiality, or who tries to induce others to violate it, faces imprisonment for not more that six months or a fine of not more than SFr. 50,000. If the violation has been committed by negligence, the penalty is a fine not exceeding SFr. 30,000. The violation of bank customer confidentiality remains punishable even after the termination of the official or employment relationship or the exercise of the profession (Art. 47, Federal Law on Banks and Savings Banks).
Bank Secrecy is waived
In criminal investigations (suspicion of money laundering, membership of a criminal organization, theft, tax fraud, blackmail etc.)
When providing international legal assistance (criminal investigations conducted abroad);
Bankruptcy proceedings*
Civil proceedings (inheritance and divorce, for example)*
*In case of foreigners, the bankruptcy, inheritance, divorce proceedings involve a complex set of procedures according to the laws in
Switzerland, and hardly been any outcome of
success.
Due Diligence
Swiss Banks operate on 'know your
customer' basis, and it a must for all banks to verify their
clients. In accordance with the Due Diligence Agreement (CDB
03), the bank verifies the identity of the contracting partner
by obtaining a certified copy of an official identification
document (passport, identity card, driving license, etc.)
issued by a public notary or public office that customarily
issues such authentications. The bank also checks the mailing
address of the new customer through an exchange of
correspondence. If you are visiting Switzerland, you can
directly ensure your identity by visiting the concerned bank.
The same procedure applies for numbered account holder, and
one should bear that in mind that there is no such thing
called anonymous accounts in Switzerland. your identity is
verified and always known to the bank, governed by bank
secrecy laws.
Due Diligence Protocol
Art. 2 Verification of the contracting
partner's identity
1. The banks undertake to verify the
identity of the contracting partner when establishing business
relations with said partner.
2. This regulation applies to:
- opening of accounts or passbooks;
- opening of securities accounts;
- entering into fiduciary transactions;
- renting of safe-deposit boxes;
- entering into management agreements for assets deposited
with third parties;
- the execution of transactions with securities, currencies as
well as precious metals and other commodities exceeding the
amount of CHF 25,000.
- cash transactions exceeding the amount of CHF 25,000.
Art. 8 Tax evasion and similar acts
Banks shall not provide any assistance to
their customers in acts aimed at deceiving Swiss and foreign
authorities, particularly tax authorities, by means of
incomplete or otherwise misleading attestations.
49.1 It is forbidden to remit to the
customer personally or, at his or her request, directly to
Swiss or foreign authorities, any incomplete or otherwise
misleading attestations.
49.2. Authorities include, in particular,
tax, customs, currency and bank supervisory authorities as
well as prosecution authorities.
50.1 Subject to this prohibition are
special attestations requested by the customer for submission
to authorities.
50.2 The bank is not permitted to alter
routine records, such as statements of account and securities,
credit and debit advices, settlement notes for foreign
exchange transactions, coupon and stock exchange transactions,
for the purpose of deception.
51.1 Attestations are incomplete if
significant facts are omitted in order to deceive authorities;
for example if the bank, at the given request of the customer,
omits certain items from a given attestation or from a
statement of account or securities.
51.2 It is not necessary to mention in
the statements of account or deposit that the same customer
holds other accounts or deposits.
52 Attestations are misleading if the
facts are presented in an untruthful manner to deceive the
authorities, such as:
a) by showing false dates, false amounts
or fictitious rates or by issuing credit and debit advices
showing false information about the persons debited or
credited;
b) by attesting to fictitious claims or debts (regardless of
whether or not the attestation reflects the bank's records).
c) by allowing customers to use the bank's nostro accounts for
the purpose of cutting tax duties.
The provisions of this agreement apply
without restriction to accounts, passbooks, securities
accounts and safe deposits designated by a number or code
(Swiss numbered accounts).
Fighting criminal activities and money
laundering
Bank secrecy laws cannot be exploited and
are not meant to shield criminals and criminal activities.
Swiss authorities are increasingly cooperating with other
International world countries to combat terrorism, drug
trafficking, weapons smuggling, trafficking of women and
children etc... Bank secrecy can be easily lifted, without the
knowledge of the client by direct judicial orders. The Swiss
judge may request the clients records from the respective Swiss
bank, if the client is found to be involved in illegal
criminal activities. Banking secrecy is not waived in cases of
tax evasion (such as the mere non-declaration of income or
assets). Whether all these are committed in Switzerland or
abroad, the judge trying the case has the right to obtain
information on the accused's bank accounts. Furthermore,
Switzerland is party to a number of conventions on judicial
assistance and has adopted a federal law on international
assistance in criminal matters (EIMP), enacted in 1983 and
revised and strengthened in 1997, with a view to speeding up
the processing of requests and restricting the possibilities
of appeal. Swiss Banks have no interest in money derived from
illegal crimes and therefore had adopted strict measures in
place to prevent unwanted money from entering the country.
Identification of the customer, is very imperative for the Swiss
banks which forms the very important element of due diligence.
The banks are required to know their customers, and make sure
that their deposits are free from illegal activities.
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