Post by ukipa on Jan 22, 2013 21:28:02 GMT 4
Swiss Banking
A brief overview of Swiss Banks.
Swiss banks have earned a reputation around the world for providing sophisticated and discreet banking services. There are more than 400 banks in Switzerland, ranging from the "Two Big Banks" down to small banks serving the needs of a single small community or a few special clients. The Two Big Banks, namely Credit Suisse and UBS, have extensive branch networks both throughout Switzerland and in many international financial centers. Banks are licensed by the Swiss Federal Government through its Banking Commission, and may operate throughout the country. A number also have offices or other representation in foreign countries. Among the licensed Swiss banks are the Swiss branches of banks which have their headquarters in other countries.
How safe are the Swiss banks?
Swiss banks, and Switzerland itself, have a reputation for conservative, prudent financial management. There is a minimal government insurance for small, personal bank deposits. Because of the importance of the banking industry to the overall Swiss economy, any sort of financial crisis in the banking sector would receive the full attention of both the entire Swiss banking industry and of the Swiss government. But in such a situation, there is no way to predict, or even really speculate, on what actions would be taken.
What services do Swiss Banks provide?
Some banks specialize in only a few banking services, whereas others provide a wide range. As in most of continental Europe, individuals usually buy and sell stocks and bonds through their banks. The Swiss banks collectively have a long reputation for managing investment portfolios for their clients, and providing other services such as estate planning, wealth management, trust companies, etc., for individual customers.
What are the "Private Banks?"
Private banks are those which are not incorporated, and hence the entirety of their partners' assets are available to meet the liabilities of the bank. These banks have a very long tradition in Switzerland, dating back to at least the revocation of the Edict of Nantes (1685). They are primarily associated with portfolio management for private clients. Most have become incorporated companies, so the term is rarely strictly true anymore. The term "private banking" is used more loosely to encompass all the banking services provided to clients in the area of portfolio and other wealth management services. These services are directed primarily at "high net-worth individuals", and there are a number of "private banks" which refuse any account of less than $ 1 million (or equivalent).
What is special about Swiss bank secrecy?
Banks in most countries are prohibited from divulging information about their clients, and the provisions of the Swiss law follow the same lines. Swiss law is especially strict on any breech of confidentiality, whether in banking or in other commerce. The banking act adds a special section (introduced in 1934, in order to protect accounts of Germans, especially German Jews, from Nazi confiscation) which makes it a criminal offense, with the possibility of an individual going to jail, for the bank or its employee or agent to improperly divulge any confidential information. These portions of the banking law have been interpreted, both in practice and by the courts, to make it a serious offense to divulge any information about a bank customer to any third party, including official requests of foreign governments, unless very specific criteria have been met. Swiss bank secrecy is reinforced by a constant awareness of the seriousness of the bank's obligation to maintain confidentiality, starting with bank employees having to sign the secrecy portion of the banking act as a condition of employment. Both individuals and the banks are prosecuted if a lapse is discovered; this keeps awareness of bank secrecy high and and lapses rare. While this culture of absolute discrection is integral to the Swiss banks, the branch offices outside of Switzerland must operate according to the laws of countries in which they are located, which may not provide so much protection.
The perception that Swiss bank secrecy provides a means of hiding criminal activity is, and has been for many years now, largely myth. Banking secrecy is not a protection from criminal investigations, and Swiss legal authorities routinely cooperate with their foreign counterparts in such matters. The general rule is that an activity which both the foreign government and Switzerland consider a crime will result in cooperation, including Swiss authorities examining bank account transactions.
The perception that Swiss bank secrecy can be used to hide criminal activity is due to many factors. Partly it is an historical relic; prior to the 1980s, there were a number of financial activities which Switzerland did not consider criminal, but which many other countries did. Today, Switzerland's financial legislation is quite similar to that of most other OECD countries, and financial crimes in one jurisdiction are likely to be considered criminal in Switzerland. Partly it is due to the difficulty having enough information to make a request; "fishing expeditions" cannot be done. This is quite similar to both internal and international practice in most countries, but can be used as a convenient excuse by frustrated criminal investigators. And partly it is due to specific differences in criminal law; in particular, the legal definition of what constitutes a tax crime varies considerably from country to country.
Inheritance, divorce, and civil tax matters present special problems vis-a-vis banking secrecy because these are civil rather than criminal matters. The web site at www.switzerland.isyours.com has more information and includes links to sections of the relevant legislation. How to deal with tax matters which foreign governments consider a crime but which Switzerland considers a civil offense is under active political discussion at present (spring 2009).
What are numbered accounts?
Numbered accounts (or pseudonym accounts) are not very different from normal bank accounts. The usual account records omit reference to the customer's name or other identifying information, replacing it with a code number or the pseudonym. The relationship between the code number or pseudonym and the actual customer is known only to a few senior managers and their secretaries within the bank. It is important to emphasize that a Swiss bank has an obligation to know the true identity of both the account holder and its beneficial owner, and that there is no such thing as an anonymous account. Because of the constant awareness and strict enforcement of bank secrecy, there is actually little need for numbered accounts, and it should be noted that they incur additional overheads for the bank (it is more difficult to validate transactions to and from such accounts). For all these reasons, the stories one reads about anonymous, numbered accounts are legfiction.
How can I open a Swiss bank account?
Contact the bank with which you want to do business and get their conditions for opening an account. Small accounts are expensive to maintain, and for non-residents many banks have a hefty minimum deposit requirement. We continually hear rumors that this or that bank will open non-resident savings accounts with an initial deposit of Fr. 5,000, but this is rumor and we don't monitor initial deposit requirements (which a bank may change at any time); most Swiss banks have much higher minimum deposit requirements for non-residents.
Swiss laws designed to prevent money-laundering are very strict. The Swiss bank is required to know its client sufficiently well to ensure that the funds being placed on deposit are unlikely to be coming from illegal activities. Opening an account on behalf of someone else is very tightly regulated, and those allowed to open such accounts must meet the same requirements as banks with respect to knowing the client. While each bank may set its own internal policies to ensure compliance with the money-laundering legislation, most banks require a personal interview before opening an account. The standard policy is therefore to interview the client at the bank's offices in Switzerland, make copies of identity documents (passport) and any other relevant informaiton, and discuss how the account will be used and the source of funds. Ony after evaluating this information will the bank decide whether to accept someone as a client. We advise extreme caution before becoming involved with a Swiss bank without going through these formalities.
Non-residents are, of course, subject to their own country's legislation with respect to foreign bank accounts. While there is no Swiss legal restriction which prevents any non-Swiss from opening an account with a Swiss bank, residents of some countries may be prohibited by their own country from having such an account. But a Swiss bank is not under an obligation to accept a client, and a number of factors will be considered in deciding whether to accept a new client. In particular this will include whether what the potiential client wants to do is legal, particularly whether there is even a hint that the new client may be laundering money. Some countries have a reputation for suspect activities and a Swiss bank therefore may have a blanket policy of not accepting new clients from that country. Another problem can be that a country has legislation which is in conflict with Swiss law and which can put the bank in an impossible position of conflict; clients from such a country may not be accepted for this reason (many Swiss banks put the USA into this category, particularly if they have their own offices in New York). All of this means that non-residents will find opening a Swiss bank account more-or-less difficult, depending on their particular residency, even when as an individual they would be a desireable client.
What is the latest information about Holocaust and other dormant accounts?
There is no federal law in Switzerland governing the disposition of dormant accounts. In general, when a client has not been heard from for a number of years, the bank declares the account dormant. What happens then depends on a number of factors, including the laws of the canton in which the account was opened and any specific instructions the client may have given the bank for such an eventuality. Most business records in Switzerland, which includes all transactions in bank accounts, must be retained for 10 years; if an account is closed, there is therefore likely to be no record of it at all once 10 years has gone by. Small accounts may vanish because annual charges exceed any interest income, resulting in a zero balance and automatic closure; if there is then a wait of 10 years before looking, there won't even be any trace of the account. In researching a suspected lost account, the most important information is the name of the bank which held the account; if that is known, the bank should be contacted directly with as many details of the case as are known, and they will advise on the correct procedure. However, bank secrecy prevents them from answering the question "did X have an account with you"; such questions are routinely refused.
If the bank is not known, the search is obviously much more difficult. The Swiss Bankers Association has an office which, for a fee of Fr. 100, will attempt to trace dormant accounts when the bank is not known (Swiss Banking Ombudsman; Bahnhofplatz 9; Postfach; 8021 Zürich; Switzerland; Tel. (+41) 43 266 14 14; Fax. (+41) 43 266 14 15; e-mail is not available). As explained above, no guarantee of success can be given for such searches. This office, which may also be addressed as as the Swiss Banking Ombudsman, will consider all requests once the 10-year period has passed (hence in 2009 they will consider requests for accounts which have been inactive since 1999).
If the account has been dormant since 1945, bank secrecy has been eased somewhat and the procedures are different. Names of account holders for unclaimed accounts dating from the 1933-1945 period have been published; more information can be found at www.dormantaccounts.ch. Note that these lists contain only those accounts which have been dormant since the end of World War II, so accounts which had activity in the period immediately after the war will not be included. There is no way for the Swiss banks to know why an account has been dormant for so long, but since the initial publications in 1997 it has been determined while many belonged to Holocaust victims, others belonged to known Nazis, and some remain to be linked to anyone. While there are a few accounts with substantial balances, the vast majority of these old accounts are rather small.
A brief overview of Swiss Banks.
Swiss banks have earned a reputation around the world for providing sophisticated and discreet banking services. There are more than 400 banks in Switzerland, ranging from the "Two Big Banks" down to small banks serving the needs of a single small community or a few special clients. The Two Big Banks, namely Credit Suisse and UBS, have extensive branch networks both throughout Switzerland and in many international financial centers. Banks are licensed by the Swiss Federal Government through its Banking Commission, and may operate throughout the country. A number also have offices or other representation in foreign countries. Among the licensed Swiss banks are the Swiss branches of banks which have their headquarters in other countries.
How safe are the Swiss banks?
Swiss banks, and Switzerland itself, have a reputation for conservative, prudent financial management. There is a minimal government insurance for small, personal bank deposits. Because of the importance of the banking industry to the overall Swiss economy, any sort of financial crisis in the banking sector would receive the full attention of both the entire Swiss banking industry and of the Swiss government. But in such a situation, there is no way to predict, or even really speculate, on what actions would be taken.
What services do Swiss Banks provide?
Some banks specialize in only a few banking services, whereas others provide a wide range. As in most of continental Europe, individuals usually buy and sell stocks and bonds through their banks. The Swiss banks collectively have a long reputation for managing investment portfolios for their clients, and providing other services such as estate planning, wealth management, trust companies, etc., for individual customers.
What are the "Private Banks?"
Private banks are those which are not incorporated, and hence the entirety of their partners' assets are available to meet the liabilities of the bank. These banks have a very long tradition in Switzerland, dating back to at least the revocation of the Edict of Nantes (1685). They are primarily associated with portfolio management for private clients. Most have become incorporated companies, so the term is rarely strictly true anymore. The term "private banking" is used more loosely to encompass all the banking services provided to clients in the area of portfolio and other wealth management services. These services are directed primarily at "high net-worth individuals", and there are a number of "private banks" which refuse any account of less than $ 1 million (or equivalent).
What is special about Swiss bank secrecy?
Banks in most countries are prohibited from divulging information about their clients, and the provisions of the Swiss law follow the same lines. Swiss law is especially strict on any breech of confidentiality, whether in banking or in other commerce. The banking act adds a special section (introduced in 1934, in order to protect accounts of Germans, especially German Jews, from Nazi confiscation) which makes it a criminal offense, with the possibility of an individual going to jail, for the bank or its employee or agent to improperly divulge any confidential information. These portions of the banking law have been interpreted, both in practice and by the courts, to make it a serious offense to divulge any information about a bank customer to any third party, including official requests of foreign governments, unless very specific criteria have been met. Swiss bank secrecy is reinforced by a constant awareness of the seriousness of the bank's obligation to maintain confidentiality, starting with bank employees having to sign the secrecy portion of the banking act as a condition of employment. Both individuals and the banks are prosecuted if a lapse is discovered; this keeps awareness of bank secrecy high and and lapses rare. While this culture of absolute discrection is integral to the Swiss banks, the branch offices outside of Switzerland must operate according to the laws of countries in which they are located, which may not provide so much protection.
The perception that Swiss bank secrecy provides a means of hiding criminal activity is, and has been for many years now, largely myth. Banking secrecy is not a protection from criminal investigations, and Swiss legal authorities routinely cooperate with their foreign counterparts in such matters. The general rule is that an activity which both the foreign government and Switzerland consider a crime will result in cooperation, including Swiss authorities examining bank account transactions.
The perception that Swiss bank secrecy can be used to hide criminal activity is due to many factors. Partly it is an historical relic; prior to the 1980s, there were a number of financial activities which Switzerland did not consider criminal, but which many other countries did. Today, Switzerland's financial legislation is quite similar to that of most other OECD countries, and financial crimes in one jurisdiction are likely to be considered criminal in Switzerland. Partly it is due to the difficulty having enough information to make a request; "fishing expeditions" cannot be done. This is quite similar to both internal and international practice in most countries, but can be used as a convenient excuse by frustrated criminal investigators. And partly it is due to specific differences in criminal law; in particular, the legal definition of what constitutes a tax crime varies considerably from country to country.
Inheritance, divorce, and civil tax matters present special problems vis-a-vis banking secrecy because these are civil rather than criminal matters. The web site at www.switzerland.isyours.com has more information and includes links to sections of the relevant legislation. How to deal with tax matters which foreign governments consider a crime but which Switzerland considers a civil offense is under active political discussion at present (spring 2009).
What are numbered accounts?
Numbered accounts (or pseudonym accounts) are not very different from normal bank accounts. The usual account records omit reference to the customer's name or other identifying information, replacing it with a code number or the pseudonym. The relationship between the code number or pseudonym and the actual customer is known only to a few senior managers and their secretaries within the bank. It is important to emphasize that a Swiss bank has an obligation to know the true identity of both the account holder and its beneficial owner, and that there is no such thing as an anonymous account. Because of the constant awareness and strict enforcement of bank secrecy, there is actually little need for numbered accounts, and it should be noted that they incur additional overheads for the bank (it is more difficult to validate transactions to and from such accounts). For all these reasons, the stories one reads about anonymous, numbered accounts are legfiction.
How can I open a Swiss bank account?
Contact the bank with which you want to do business and get their conditions for opening an account. Small accounts are expensive to maintain, and for non-residents many banks have a hefty minimum deposit requirement. We continually hear rumors that this or that bank will open non-resident savings accounts with an initial deposit of Fr. 5,000, but this is rumor and we don't monitor initial deposit requirements (which a bank may change at any time); most Swiss banks have much higher minimum deposit requirements for non-residents.
Swiss laws designed to prevent money-laundering are very strict. The Swiss bank is required to know its client sufficiently well to ensure that the funds being placed on deposit are unlikely to be coming from illegal activities. Opening an account on behalf of someone else is very tightly regulated, and those allowed to open such accounts must meet the same requirements as banks with respect to knowing the client. While each bank may set its own internal policies to ensure compliance with the money-laundering legislation, most banks require a personal interview before opening an account. The standard policy is therefore to interview the client at the bank's offices in Switzerland, make copies of identity documents (passport) and any other relevant informaiton, and discuss how the account will be used and the source of funds. Ony after evaluating this information will the bank decide whether to accept someone as a client. We advise extreme caution before becoming involved with a Swiss bank without going through these formalities.
Non-residents are, of course, subject to their own country's legislation with respect to foreign bank accounts. While there is no Swiss legal restriction which prevents any non-Swiss from opening an account with a Swiss bank, residents of some countries may be prohibited by their own country from having such an account. But a Swiss bank is not under an obligation to accept a client, and a number of factors will be considered in deciding whether to accept a new client. In particular this will include whether what the potiential client wants to do is legal, particularly whether there is even a hint that the new client may be laundering money. Some countries have a reputation for suspect activities and a Swiss bank therefore may have a blanket policy of not accepting new clients from that country. Another problem can be that a country has legislation which is in conflict with Swiss law and which can put the bank in an impossible position of conflict; clients from such a country may not be accepted for this reason (many Swiss banks put the USA into this category, particularly if they have their own offices in New York). All of this means that non-residents will find opening a Swiss bank account more-or-less difficult, depending on their particular residency, even when as an individual they would be a desireable client.
What is the latest information about Holocaust and other dormant accounts?
There is no federal law in Switzerland governing the disposition of dormant accounts. In general, when a client has not been heard from for a number of years, the bank declares the account dormant. What happens then depends on a number of factors, including the laws of the canton in which the account was opened and any specific instructions the client may have given the bank for such an eventuality. Most business records in Switzerland, which includes all transactions in bank accounts, must be retained for 10 years; if an account is closed, there is therefore likely to be no record of it at all once 10 years has gone by. Small accounts may vanish because annual charges exceed any interest income, resulting in a zero balance and automatic closure; if there is then a wait of 10 years before looking, there won't even be any trace of the account. In researching a suspected lost account, the most important information is the name of the bank which held the account; if that is known, the bank should be contacted directly with as many details of the case as are known, and they will advise on the correct procedure. However, bank secrecy prevents them from answering the question "did X have an account with you"; such questions are routinely refused.
If the bank is not known, the search is obviously much more difficult. The Swiss Bankers Association has an office which, for a fee of Fr. 100, will attempt to trace dormant accounts when the bank is not known (Swiss Banking Ombudsman; Bahnhofplatz 9; Postfach; 8021 Zürich; Switzerland; Tel. (+41) 43 266 14 14; Fax. (+41) 43 266 14 15; e-mail is not available). As explained above, no guarantee of success can be given for such searches. This office, which may also be addressed as as the Swiss Banking Ombudsman, will consider all requests once the 10-year period has passed (hence in 2009 they will consider requests for accounts which have been inactive since 1999).
If the account has been dormant since 1945, bank secrecy has been eased somewhat and the procedures are different. Names of account holders for unclaimed accounts dating from the 1933-1945 period have been published; more information can be found at www.dormantaccounts.ch. Note that these lists contain only those accounts which have been dormant since the end of World War II, so accounts which had activity in the period immediately after the war will not be included. There is no way for the Swiss banks to know why an account has been dormant for so long, but since the initial publications in 1997 it has been determined while many belonged to Holocaust victims, others belonged to known Nazis, and some remain to be linked to anyone. While there are a few accounts with substantial balances, the vast majority of these old accounts are rather small.
