Banking in Switzerland dates to the early 18th century throughSwitzerland's merchant trade and over the centuries has grown into a complex and regulated international industry. Banking is seen as veryemblematic of Switzerlandand the country has been one of the largest, if not largest,offshore financial centers andtax havens in the world since the mid-20th century, with a long history of banking secrecy, security and client confidentiality reaching back to the early 1700s. Starting as a way to protect wealthy European banking interests, Swiss banking secrecy was codified in 1934 with the passage of a landmark federal law, theFederal Act on Banks and Savings Banks. These laws were used to protect assets of persons being persecuted byNazi authorities but have also been used by people and institutions seeking toillegally evade taxes, hide assets, or to commit otherfinancial crime.[1][2]
Controversial protection of foreign accounts and assets duringWorld War II sparked a series of proposed financial regulations seeking to limit bank secrecy, but with little resulting action. Despitevarious international efforts to roll back banking secrecy laws in the country which were largely minimized or reverted by Swiss social and political forces, in 2017 Switzerland agreed to "automatic exchange of information" (AEOI) with foreign governments and their revenue services regarding information of depositors not resident in Switzerland.[3][4] This constitutedde facto the end of Swiss banking secrecy for depositors who were not Swiss residents.[5] Furthermore, after Switzerland ratified theForeign Account Tax Compliance Act agreement with the United States, because of concerns regarding their tax liability (the U.S. taxes its citizens regardless of whether they are resident in the U.S. or not) some Swiss banks have gone so far as to close accounts held by US citizens, and to ban the opening of new accounts by US citizens and by dual US-Swiss citizens, including those deemed lawful permanent Swiss residents.[6] Thus banking secrecy remains in force only for those residing in and solely taxable in Switzerland.[7]
Disclosing client information has been considered by Switzerland a criminal offence since the early 1900s. Employees working in Switzerland and at Swiss banks abroad have "long adhered to an unwritten code similar to thatobserved by doctors or priests".[8] Since 1934 Swiss banking secrecy laws have been violated to a major extent by only four people, namely:Christoph Meili (1997),Bradley Birkenfeld (2007),Rudolf Elmer (2011) andHervé Falciani (2014).[citation needed]
TheSwiss Bankers Association (SBA) estimated in 2018 that Swiss banks heldUS$6.5 trillion in assets or 25% of all global cross-border assets. Switzerland's main lingual hubs,Geneva (for French),Lugano (for Italian), andZürich (for German) service the different geographical markets. It currently ranks number two behind the United States and on par withSingapore in theFinancial Secrecy Index.[9] The banks are regulated by theSwiss Financial Market Supervisory Authority (FINMA) and theSwiss National Bank (SNB) which derives its authority from a series of federal statutes. Banking in Switzerland has historically played, and still continues to play, a dominant role in theSwiss economy and society. According to theOrganisation for Economic Co-operation and Development (OECD), total banking assets amount to 467% of total gross domestic product.[9] Banking in Switzerlandhas been portrayed, with varying degrees of accuracy, in overall popular culture and television shows.
Switzerland's credibility as a banking centre was hurt in 2023 after the collapse ofCredit Suisse, one of the largest Swiss banks, which was subsequently acquired by its Swiss competitorUBS. However, the rapid action taken by theFederal Council, theSwiss National Bank, and FINMA helped to minimise further damage.[10][11][12]
Bank secrecy inthe Swiss region can be traced[9] to theGreat Council of Geneva, which outlawed the disclosure of information about theEuropean upper class in 1713.[9] During the 1780s, Swiss bank accounts beganinsuring deposits, which contributed to their reputation forfinancial security.[9] In 1815, theCongress of Vienna formally establishedSwitzerland's international neutrality, which led to a large capital influx.[9] The wealthy,landlocked Switzerland saw banking secrecy as a way to build an empire similar to that ofFrance,Spain, andthe United Kingdom.[9] Swiss historian Sébastian Guex notes inThe Origins of Secret Swiss Bank Accounts:
This is what the Swiss bourgeoisie are thinking: "That's our future. We will play on the contradictions between the European powers and, protected by the shield of our neutrality, our arm will be industry and finance."[13]
Aftera small scale civil war in the 1840s between theSwiss cantons, theSwiss Federation was founded in 1848.[9] The formation of the state, through adirect democracy, contributed to the political stability needed for banking secrecy.[9] Themountainous terrain of Switzerland provided a natural environment in which to excavateunderground vaults for storage of gold and diamonds.[9] In the 1910s, duringWorld War I, Swiss bankers traveled to France to advertise the country's banking secrecy. According to Sébastien Guex, the banks printed "brochures, circulars, personalised letters, and advertising in newspapers, and sent representatives who approached their clientele in person".[14][9] The war's contribution to political and economic instability sparked a rapid capital movement into Switzerland.[9] As France and Germany introducedprogressive income and inheritance taxes for the first time, taxing greater wealth at higher rates[14] tofinance the war, wealthy clients moved their holdings into Swiss accounts to avoid taxation.[9] The French banked in Geneva, the Italians inLugano, and the Germans inZürich.[9]
TheFederal Act on Banks and Savings Banks, colloquially known as the Banking Law of 1934, made the violation of banking secrecy a federal criminal offence.[9][15] That major step beyond the prior enforcement of banking secrecy under civil law resulted from several developments of the early 1930s, including the introduction in the same legislation of an embryonic form of banking supervision, which Swiss bankers argued could endanger secrecy; evolving jurisprudence of theFederal Supreme Court; and a 1932 campaign against tax evasion in France led byÉdouard Herriot's government,[16] following a financial scandal that erupted in France in that year, involving thousands of wealthy French citizens and the Commercial Bank of Basel (Banque commerciale de Bâle–BCB). In a hotel apartment in Paris, the police discovered that the director and other officials of the aforementioned Swiss bank were providing information to important members of the French financial elite on how to transfer their money to Switzerland, in order to obtain untaxed returns.[17] Alleged wealthy French tax evaders includedmilitary generals andCatholic bishops.[18] An additionalprovision, Article 47(b), was drafted before its ratification toprotect Jewish assets from the Nazi party.[15][19]
DuringWorld War II, Switzerland remained diplomatically neutral but its economy and financial system served theAxis powers by storing gold and cash balances in underground vaults,[15] buying gold from the Nazi German state, and lending to both Germany and Italy, thus supporting their aggressive endeavors.[16]Adolf Hitler maintained an account at theUnion Bank of Switzerland (UBS) estimated at 1.1 billion ℛ︁ℳ︁.[15][20] After the United States formally asked the bank to transfer the money in the 1990s, UBS wiredUS$400 to 700 million worth of Reichsmarks to U.S. authorities.[15]Banking regulations in Switzerland limit the amount oforphaned assets allowed to leave a bank's custody.[15] UBS, with consent from theSwiss government,froze the account containing Hitler's assets indefinitely, and clipped the Reichsmarks, stripping the currency of value.[20] DuringWorld War II, UBS also maintained accounts for hundreds ofGerman Jewish businesspeople and households.[19] After the Banking Law of 1934 was passed, the bank aggressively protected assets of the "enemies of Nazi Germany".[19] When Hitler announced an (aborted)invasion of Switzerland in 1940,[dubious –discuss] UBS contracted theSwiss Armed Forces to blockade theirretail banks and transport Jewish assets to underground military bunkers.[21] TheSwiss Bank Corporation (SBC) andCredit Suisse, did likewise.[15] However, after the war, many of these account holders had been killed in the Holocaust, and their heirs often lacked the documentation required to claim the accounts. For decades, Swiss banks were accused of failing to return the money to rightful heirs, destroying records or placing excessive bureaucratic obstacles in the way of claims, and profiting from dormant accounts. This ended when theVolcker Commission reached a paltry $1.25 billion settlement with the victims.[22]
After the end ofWorld War II, Switzerland and its financial system benefited greatly from having remained unharmed while all the neighbouring economies were devastated, but had to face the reputational damage from its support to the Axis powers, which also led to threats to banking secrecy as the Allied victors sought to expropriate Nazi assets held under Swiss custody. By and large, the Swiss banking sector was able to successfully deflect the threat to its secrecy practices, not least as it supported France and the United Kingdom with significant lending.[16] When British politicianGeorge Brown blamed "gnomes of Zurich" for a weak pound sterling in 1964, Swiss bankers began using the title as proof of their financial skill and adherence to secrecy.[23] Throughout the 1980s and 1990s, numerous international proposals for bank secrecy rollbacks were made by foreign states with little success.[15]
After the2008 financial crisis, Switzerland signed the European UnionSavings Directive (EUSD) which obliges Swiss banks to report to43 European countries non-identifying annual tax statistics.[24] On December 3, 2008, theFederal Assembly increased the prison sentence for violations of banking secrecy from a maximum of six months to five years.[25] In late 2008, after an international, multi-stateinvestigation into Switzerland's role in U.S. tax evasion, UBS entered into a limited,deferred prosecution agreement (DPA) with the U.S.Department of Justice.[26] The agreement initiated the landmarkBirkenfeld Disclosure of information on more than 4,000 clients.[26]
If there is anything the Swiss take more seriously than the precision oftheir watches or the quality oftheir chocolate, it's the secrecy of their banks.
In November 2013, theZürcher Kantonalbank was classified as a systemically important bank in Switzerland by order of the Swiss National Bank (SNB), alongsideUBS,Credit Suisse,Raiffeisen (Switzerland) andPostFinance, and must meet stricter capital requirements and prepare contingency plans for times of crisis.[28] In another step toward loosening banking secrecy, Switzerland signed the U.S.Foreign Account Tax Compliance Act (FATCA), after rejecting it twice in parliament.[26] The FATCA requires Swiss banks to disclose non-identifying U.S. client information annually to theInternal Revenue Service.[26] The agreement does not guarantee the semi-automatic information transfers, which remain at the discretion of Swiss government authorities.[29] If a client does not consent to having their information shared with the IRS, Swiss law prohibits the disclosure.[29] If a client does consent, Swiss banks send the IRS tax-related information about the account holder but are prohibited from disclosing identities pursuant to Article 47 of the Banking Law of 1934.[29] The 2018Financial Secrecy Index stated: "this [does] not mean that Swiss banking secrecy was finished, as some excitable news reports suggest... the breach was a partial [dent]".[30]
In March 2015, the Swiss government entered into bilateral "Rubik Agreements" with Germany, Austria, and the United Kingdom allowing foreign holders of Swiss bank accounts to retain their anonymity in exchange for paying predeterminedback taxes.[31] Switzerland adopted the International Convention on the Automatic Exchange of Banking Information (AEOI) in 2017, agreeing to automatically release limited financial information to certain countries for the sole purpose oftax auditing.[32] This agreement includes theCommon Reporting Standard (CRS) which obliges Swiss banks to automatically send foreign tax authorities the client's name, address,domicile, tax number, date of birth, account number, account balance at years end, and thegross investment income.[33] The CRS does not, however, override the Swiss Banking Law of 1934, so the client's expenses (withdrawals) and investments are not disclosed.[30] Thus tax authorities cannot "go fishing" for tax evaders, they must directly link a financial crime to the client's account.[30] The disclosed information canonly be used for tax auditing and Swiss authorities may prevent disclosure.[34]
In December 2017, the Swiss parliament launched a standing initiative and expressed an interest in formally embedding banking secrecy within theSwiss Constitution, making it a federally-protectedconstitutional right.[35][36] In January 2018, aU.S. district court ruled that Swiss bankers "[have] nothing to do with the choice that an American taxpayer makes to not declare offshore assets", later clarifying they should not be seen as facilitating tax evasion but rather provide a legal service that is made illegal by the client.[37] TheSwiss Justice Ministry announced in March 2018 that disclosure of client information in a pendingcourt case involving a Swiss bank is subject to federalespionage andextortion charges in addition to charges relating to banking secrecy laws.[38]
After a serious crisis, on 19 March 2023, following negotiations with theSwiss government, UBS announced its intent toacquire Credit Suisse for $3.25 billion (CHF 3 billion) in order to prevent the bank's collapse.[39][40][41] UBS completed the acquisition in June 2023.[42]
Switzerland is a prosperous nation with aper capita gross domestic product higher than that of mostWestern European nations. The value of theSwiss franc (CHF) has been relatively stable compared with that of many others.Swiss neutrality andnational sovereignty, long recognized by foreign nations, have fostered a stable environment for the banking sector to develop and thrive. Switzerland maintained neutrality through bothWorld Wars, is not a member of theEuropean Union orNATO, and did not join theUnited Nations until 2002.[43][44] TheBank of International Settlements (BIS), an organization that facilitates cooperation among the world'scentral banks, is headquartered inBasel. Founded in 1930, the BIS chose to locate in Switzerland because of thecountry's neutrality, which was important to the organization founded by countries that had been enemies in World War I.[45]
Banking has played a dominant role in theSwiss economy for two centuries.[9] According to theOrganisation for Economic Co-operation and Development (OECD), total banking assets amount to 467% of total gross domestic product.[9]
Swiss banks managed $2.4 trillion (CHF2.1 trillion) of assets belonging to wealthy foreigners in 2022, more than any other country and before Hong Kong ($2.2T) or Singapore ($1.5T) who are ranked 2nd and 3rd respectively, according to the study conducted by theBoston Consulting Group.[46]
Most of the wealth from overseas in Switzerland originates inGermany,France andSaudi Arabia (2018).[47] According to theSwiss Bankers Association in 2022, the amount held byRussian clients in Swiss banks is betweenCHF150 and CHF200 billion ($160 and $214 billion).[48] The holding of theRothschilds assets is located inZurich, said by insiders to be worth "trillions" according toThe Independent (UK) journal and others.[49][50]
TheSwiss Financial Market Supervisory Authority (FINMA) is a public law institution that supervises most banking-related activities as well assecurities markets andinvestment funds.[51] Regulatory authority is derived from the Swiss Financial Market Supervision Act (FINMASA) and Article 98 of the Swiss Federal Constitution. The office of the Swiss BankingOmbudsman, founded in 1993, is sponsored by the Swiss Banking Ombudsman Foundation, which was established by theSwiss Bankers Association. The ombudsman's services, which are offered free of charge, includemediation and assistance to persons searching for dormant assets. The ombudsman handles about 1,500 complaints raised against banks yearly.[52] Generally speaking, lawyers will not work against the banks and regulators are "too weak" to act in case of a problem, according to theFinancial Times of London.[53]
In February 2013, theSwiss Federal Council allowed the signing of theForeign Account Tax Compliance Act (FATCA) with the US. These agreements force all Swiss banks to inform theInternal Revenue Service of undeclared, offshore accounts. These new regulations are applicable from 2014, and in turn assure Swiss banks of continued operations within the US.[54]
In July 2019, theUS Senate approved theDouble Taxation Treaty (DTA) with Switzerland, which had already been accepted by the Swiss parliament in 2010. The new agreement, applicable to accounts from September 23, 1999, onward, amends the tax treaty of 1996 and regulates requests for information on financial accounts by US authorities, as well as exemptions for retirement savings by US persons.[55]
Starting in 2019, Switzerland began to share (with the country of origin or residence) the details of 3.1 million bank accounts held by foreigners, as part of the agreed automatic exchange of information.[56][57] Swiss banks, insurance companies and trusts have a legal obligation to comply but charitable Swiss foundations are so far exempt.[56][58] As of 2019, Switzerland received financial data from 75 countries and shared data with 63 (over 100 countries starting in 2023) representing 3.6 million accounts as of 2023. Around 9000 banks, insurers, trusts and other financial institutions in Switzerland provide this information to the Swiss authorities.[59][60][61][62]
Swiss banks are obliged to reject or terminate business relationships if there are doubts about the real identity of the owner of the account.[63] Swiss banks have a legal obligation to record the ultimatebeneficial owners of all assets they handle worldwide, but doing so accurately can be trickyin jurisdictions where it is easy for third parties to mask who the owners are.[64] Thus,loopholes exist through the use ofshell companies,trust funds, andproxy directors signing the paperwork without owning the assets.[65]
Similarly, the use of a "straw man" or a family member is a way also to hide the true beneficial ownership in some cases.[66]
Loopholes exist also with people withmultiple nationalities who only declare one citizenship to the authoritiesfor the purpose of tax reporting.[67]
Another loophole consists (for US citizens) in setting upshell companies abroad and registering them with theIRS as "offshore financial institutions". The IRS issues the entities unique Global Intermediary Identification Numbers, or GIINs, which relieve the banks ofFATCA's requirement to investigate whether they're held by Americans. This loophole was allegedly used by billionaireRobert Brockman toavoid taxation.[68]
The banking systems of Switzerland andLiechtenstein have close ties. Liechtenstein's trust companies are clients of Swiss banks. Liechtenstein does not requiretrust companies to identify people with signatory powers, and does not prosecutetax evasion ortax fraud (2000).[69]
To improve the tracking down and freezing of assets, Swiss NGOPublic Eye has called for a national task force, a register of thebeneficial owners offront companies and a reporting obligation for lawyers.[70] TheTax Justice Network andFATF[66] made similar recommendations in 2018, including breaking up theBig Four accounting firms.[71][72] As of 2022, the Swiss government is following up on some of those recommendations.[73] In addition,Transparency International is demanding that lawyers, financial advisors plus real estate and art transactions be subject to the same exacting anti-money laundering measures as banks.[74] However, in 2025, theSwiss parliament has pushed back on many of these reforms on grounds of "competitiveness" for the Swiss banking sector.[75]
The"enabling industry" refers to lawyers, fiduciaries, notaries, and real estate agents who assist criminals in investing or hiding their ill-gotten wealth. Their activity is not covered by theSwiss Anti-Money Laundering Act as long as they are only advising clients to place money in a particular financial institution or country.[76] Furthermore, lawyers in Switzerland can refuse to disclose almost anything to the authorities about their clients.[64][77]
Under the Swiss Anti-Money Laundering Act, banks mustreport suspicious clients and transactions to the authorities. Lawyers and other advisors have no such obligation if they simply create trusts and other constructs rather than handle assets.[78]
According to the Money Laundering Reporting Office Switzerland in 2017, official "suspicious activity reports" reached nearly 4,700 (worth $16.2 billion) up from 2,909 reported cases in 2016.[79] Suspicious activity reports increased to 21,000 in 2025.[80]
The Swiss Financial Services Act of 2020 (FinSA) requiresfinancial advisers to obtain a licence (950 firms advising on nearly $200 billion have been approved byFINMA). The law also requires any "retrocession" paid by the bank to the advisor to be disclosed publicly.[53]
Under current rules, banking institutions and cantonal authorities can only report what is in their registers; looking into the origins of assets or connections between individuals is not permitted.[81] For example, in 2022, aRussian oligarch reportedly handed his Swiss company over to his wife to avoid thesanctions against Russia.[82]
Swiss authorities canfreeze assets if the law requires them to. However,seizing assets is only permitted incases involving crime or for destitutedpotentates.[83][84]
At least a dozen destitute autocrats have had their assets frozen or seized by theSwiss government over the years. The amounts can be counted in billions of dollars. According to theSwiss media, some of the amounts have not yet been restituted to the people of the countries of origin to whom it properly belongs.[85]
Breaches of banking secrecy laws in Switzerland are automatically processed pursuant toArticle 47 of the Banking Law of 1934: those who disclose client information are subject to a maximum of five years'imprisonment and 250,000francs (€215,000 orUS$250,000)[86] in fines.[87]Whistleblowers and leakers of client information often face hostility from the public and sustain professional setbacks.[88][89] Denounced as a criminal in Switzerland, a federalarrest warrant has been in place forBradley Birkenfeld since 2008, afterhe disclosed UBS client information to the U.S.Internal Revenue Service in 2007.[90] After the2008 financial crisis, the Swiss Parliament initiated a series of internationaltax treaties that rolled back banking secrecy protections for foreign clients in response to pressure from theEuropean Union, United States, andUnited Kingdom.[9]
As of 2018[update], there are more than 400 securities dealers andbanking institutions in Switzerland, ranging from the "Two Big Banks" down to small banks serving the needs of a single community or a few special clients.[91] The largest and second largest Swiss banks areUBS Group AG andCredit Suisse Group AG, respectively. They account for over 50% of all deposits in Switzerland; each has extensive branch networks throughout the country and most international centers. Due to their size and complexity, UBS and Credit Suisse are subject to an extra degree of supervision from theFederal Banking Commission.[92]
As of 2023[update] only one in five Swiss people banks with either UBS or Credit Suisse, but most Swiss prefer one or the other. Credit Suisse was historically the bank ofProtestant Zürich; UBS originated inCatholic Basel, near France.[93]
The Swiss National Bank (SNB) serves as the country'scentral bank. Founded by the Federal Act on the Swiss National Bank (16 January 1906), it began conducting business on 20 June 1907. Its shares are publicly traded, and are held by thecantons, cantonal banks, and individual investors; the federal government does not hold any shares.[94] Although a central bank often has regulatory authority over the country's banking system, the SNB does not; regulation is solely the role of the Federal Banking Commission.[95]
Raiffeisen Banks "assumes the role of central bank" in providing treasury services, and is the third largest group consisting of 328 banks in 2011, 390 in 2012 with 1,155 branches.[96][97] According to the bank in 2012 non-U.S. businesses ofWegelin & Co, the oldest Swiss bank, would be bought by the Raiffeisen group. The group has 3 million plus clients within Switzerland.[98][99]
UBS Group AG came into existence in June 1998, whenUnion Bank of Switzerland, founded in 1862, andSwiss Bank Corporation, founded in 1872,merged.[101] Headquartered inZürich andBasel, it is Switzerland's largest bank.[101] It maintains seven main offices around the world (four in theUnited States and one each in London, Tokyo, and Hong Kong) and branches on five continents.[101] UBS has been at the center ofvarious tax evasion investigations and othercriminal investigations since its founding. UBS was fined $100 million by theFederal Reserve in 2004 for trading indollars withIran and other sanctioned countries.[102]
Credit Suisse Group was the second-largest Swiss bank.[103] Based in Zürich and founded in 1856, Credit Suisse offers private banking, investment banking and asset management services.[103] It acquired theFirst Boston Corporation in 1988 and merged with theWinterthur insurance company in 1997; the latter was sold toAxa in 2006.[104] The asset management services were sold toAberdeen Asset Management during the2008 financial crisis.[103] Credit Suisse has been at the center ofvarious tax evasion investigations ormoney laundering activities since its founding.[105]Credit Suisse collapsed in 2023 andit was acquired by UBS the same year.[106]
The termprivate bank refers to a bank that offersprivate banking services and in its legal form is a partnership.[107] The first private banks were created inSt. Gallen in the mid-18th century and in Geneva in the late 18th century as partnerships, and some are still in the hands of the original families such asHottinger andMirabaud.[107] In Switzerland, such private banks are called "private bankers" (in the local languages, a protected term) to distinguish them from the other private banks which are typically shared corporations.[107] Historically in Switzerland a minimum of CHF1 million was required to open an account, however, over the last years many private banks have lowered their entry hurdles to CHF250,000 for private investors.[107]
There are, as of 2006, 24cantonal banks; these banks are state-guaranteed semi-governmental organizations controlled by one of Switzerland's26 cantons that engage in all banking businesses.[108] Together the cantonal banks account for about 30% of the banking sector in Switzerland, with a network of over 800 branches and 16 000 employees in Switzerland. In 2014 consolidated total assets of all cantonal banks accounted around 500 bln CHF, which is comparable with those of one the "Big Banks", UBS and Credit Suisse.[109] The largest cantonal bank, theZurich Cantonal Bank, has approximately 5 000 employees had a 2005 net income of CHF810 million.[110]
In 1996 and 1997, a series of class action lawsuits were filed in several United States federal courts against Swiss banks and other Swiss entities, alleging that financial institutions in Switzerland collaborated with and aided the Nazi Regime by knowingly retaining and concealing assets of Holocaust victims, and by accepting and laundering illegally obtained Nazi loot and profits of slave labor. The resultingVolcker Commission and agreement brokered therefrom resulted in a $1.25 billion restitution to Holocaust victims.[22]
[Banking secrecy] is comparable tomedical confidentiality ... [Switzerland] must absolutely respect the private sphere ... [no one should] know what there is in your bank account.
Switzerland, considered the "grandfather of bank secrecy", has been one of the largestoffshore financial centers andtax havens in the world since the mid-20th century.[89] Despite an international push to meaningfully roll back banking secrecy laws in the country, Swiss political forces have minimized and reverted many of the proposed rollbacks.[89] Disclosing client information has been considered a serious social and criminal offense since the early 1900s.[89]Whistleblowers, despite legal protections, often face professional setbacks in Switzerland.[89][88] Swiss bankers who maintain officesexclusively in Switzerland are shielded from a foreign state's lawsuits,extradition requests, and criminal charges, as long as they remainwithin the country's legal jurisdiction.[37] In spite of minor adjustments to bank secrecy, bankers working in Switzerland and abroad at Swiss banks have long adhered to an unwritten code similar to that observed by doctors or priests.[8] Switzerland's main lingual hubs,Geneva (forFrench),Lugano (forItalian), andZürich (forGerman) service the different geographical markets.[89] It consistently ranks in the top three states on theFinancial Secrecy Index and was named first many times, most recently in 2018.[89] TheSwiss Bankers Association estimated in 2018 that Swiss banks held US$6.5 trillion in assets or 25% of all global cross-border assets.[89] These secrecy laws have linked the Swiss banking system with individuals and institutions seeking toillegally evade taxes, hide assets, or generally commitfinancial crime.[112]
Secrecy laws have been violated by four people since 1934:Christoph Meili (1997),Bradley Birkenfeld (2007),Rudolf Elmer (2011), andHervé Falciani (2014).[8] In all four cases, thewhistleblowers were served with federal arrest warrants, fined, and sustained professional setbacks in Switzerland.[113]
As of 2015, Swiss banking secrecy was considered "dead" because ofFATCA, but according to theTax Justice Network in 2018, these schemes are "full of loopholes and shortcomings" which can still be exploited by lawyers to hide the assets of their clients.[114][115] Additionally, some autocratic or developing countries have noautomatic exchange of tax information with Switzerland.
In 2022, theHelsinki Commission of theU.S. Congress stated:[116]
Long known as adestination for war criminals andkleptocrats to stash their plunder,Switzerland is a leading enabler of Russian dictatorVladimir Putin and his cronies. After looting Russia, Putin andhis oligarchs use Swiss secrecy lawsto hide and protect the proceeds of their crimes.
Since leaking financial data is a criminal offense in Switzerland (even if it is in the public interest)[117] punishable with up to five years in jail,Swiss media argued in February 2022 that the banking secrecy law runs contrary tofreedom of speech andfreedom of the press in some cases.[118][119] In 2022, theUnited Nations Human Rights Council asked for a better protection of journalists and whistleblowers in this regard.[120]
A handful of larger Swiss banks operate undisclosed or otherwise secretivebank vaults, storage facilities orunderground bunkers forgold bars,diamonds, or other valuablephysical assets.[21][121] Most of these underground bunkers are located near or at the foothills of the mountainous regions of theSwiss Alps.[122] These facilities are not subject to thesame banking regulations asbanks in Switzerland and do not have to report holdings to regulatory agencies.[122][123] TheSwiss defense department estimates that of the ten former militarybunkers available for sale, six of them were sold to Swiss banks to house assets during the 1980s and 1990s.[21][124] Storage in these underground bunkers and bank vaults is typically reserved for clients that pass a multi-stagesecurity clearance.[122] Some of these bunkers are not accessible by road or foot and require aircraft transportation.[21]
Many banks in Switzerland offer clientsnumbered bank accounts, accounts where the identity of the holder is replaced with a multi-digit number known only to the client and select private bankers.[125][126] Although these accounts do add another layer of banking secrecy, they are not completely anonymous as the name of the client is still recorded by the bank and subject to limited, warranted disclosure.[125] Some Swiss banks supplement the number with acode name such as "Cardinal",[37] "Octopussy"[127] or "Cello"[127] that provide an alternative means of identifying the client.[128] However, to open this type of account in Switzerland, clients must pass a multi-stageclearance procedure and prove to the bank the lawful origins of their assets.[129]
Swiss banks have served assafe havens for the wealth ofdictators,despots,mobsters,arms dealers,corrupt officials, andtax cheats of all kinds.[130][131][132]
Historically, mobsterMeyer Lansky, Vatican-linked bankerLicio Gelli of the lodge "P2" in Italy, Mexican presidentCarlos Salinas's family amongst others, have reportedly used Swiss banks tolaunder money over the years.[133][134][135]
Swiss banks have been commonly identified asholding ill-gotten Nazi gold.[136] TheSwiss National Bank, the largest gold distribution centre in continental Europe before the war, was the logical venue through whichNazi Germany could dispose ofits gold.[137]
Time magazine reported that throughout 1981 and 1982, the Israelis reportedly set up Swiss bank accounts to handle the financial end ofthe annual multi-million dollars arms deals betweenIran and Israel during theIran–Iraq War.[138][139][140]
According to the Swiss Federal Prosecutor's office andmedia, during the 1990s and early 2000sAl Qaeda members had accounts at Swiss banks, including atUBS.[141][142]
Switzerland finally released a total of $683 million in Marcos funds to the Philippines Treasury in 2004.[143][144]
Mark Pieth, a Swiss professor of criminal law, saidMobutu ofZaire had stolen US$30 billion over his 30 years in power but much of it he used to oil the wheels of power and pay off political and military allies. Billions were hidden in Swiss bank accounts illegally.[145][146]
According to Haitian authorities,Jean Claude Duvalier had nearly $300 million of Haitian people's money hidden in Swiss bank accounts.[147]
Then-Nigerian PresidentSani Abacha is said to have stolen over a billion dollars in the 90's from his country, some of it hidden in Swiss bank accounts.[148][149]
In 2013, theInternational Consortium of Investigative Journalists (ICIJ), aWashington, D.C.–basednonprofit news organization, obtained records of companies and trusts created by two offshore companies. These included information on at least 23 companies linked to an alleged $230 million tax fraud in Russia, a case that was being investigated bySergei Magnitsky. The ICIJ investigation also revealed that the husband of one of the Russian tax officials deposited millions in a Swiss bank account set up by one of the offshore companies.[150]
Over the past 20 years, Switzerland has returned about $2 billion of ill-gotten money in at least ten cases, including to Tunisia, Egypt, Brazil, Nigeria, Malaysia and Uzbekistan (2022).[151] Swiss bank accounts were utilised by the perpetrators of the1Malaysia Development Berhad corruption and money laundering scandal.[152]
More recent studies show thatCredit Suisse alone held assets worth $100 billion over several decades which were linked to corruption and bribery to drug and human trafficking for more than 30,000 clients.[153][154][155] Apart from the 2022 "Suisse secrets" revelations, Credit Suisse had several other cases of scandals reported by the media over the last decades.[156]
In 2018,London-basedTax Justice Network ranks Switzerland's banking sector as the "most corrupt" in the world due to a largeoffshore banking industry and very strict secrecy laws. The ranking attempts to measure how much assistance the country's legal systems provide tomoney laundering, and to protecting corruptly obtained wealth.[157]
As of 2019, key criminal probes involving Swiss banks were thePetrobras bribery case, theMozambique "tuna bonds",Credit Suisse "spygate" affair,Raiffeisen insider trading andUBS tax evasion in France.[158][159][160]
In 2021, theSwiss Broadcasting Corporation reported that the Zürich police are investigating CHF 9 billion fromVenezuela that has been received by 30 Swiss banks.[161] A Swiss bank account was used to bribe a Venezuelan minister.[162] Other major cases involving theCredit Suissemoney laundering case for drug-traffickers in Bulgaria,Falcon Bank,1MBD,Glencore,SICPA,SBM Offshore,PKB,J. Safra Sarasin,Cramer Bank andLombard Odier Bank.[163]
In 2021, Swiss firmAllied Finance Trust AG and five Swiss bankers were charged withtax fraud conspiracy inNew York.[164]
In 2021,UBS was criminally convicted by an appeals court in France formoney laundering the proceeds oftax evasion by French citizens and fined €1.8 billion.[165][166]
In 2023, Switzerland returned $138 million to Taiwan in connection with acorruption scandal relating to the sale of French frigates to Taiwan in 1991.[167]
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Switzerland has been ranked among the top threetax havens in the world every single year since the2008 financial crisis, most recently in 2018.[89] In 2021, U.S.President Joe Biden also called Switzerland a "tax haven" during hisspeech to a joint session of Congress.[168] Money placed in tax havens, by definition,evades taxation and therefore diminishes tax revenues in the government's budget of the country of origin to whom it properly belongs, substantially, including for development purposes.[169][170][171][172][173]
According to the 2018Financial Secrecy Index, Switzerland's banking secrecy laws have rendered it a premiertax haven since the 1900s.[26] It also noted that this status has been frequently abused by criminals to illegallyevade paying taxes in their home country.[26] One of the most prominent attractions of the disclosure protection laws is the distinction betweentax evasion (non-reporting of income) and taxfraud (active deception).[174] Akin to the distinction between legaltax avoidance and illegal tax evasion in the U.S., the non-reporting of income is only acivil offense in Switzerland while tax fraud is a financial crime.[174] When foreign clients deposit holdings into a Swiss bank account, the bank is legally prohibited from disclosing balances or client information to tax authorities.[174] This prohibition can only be waived if the client has produced a writtenstatement of consent or afinancial crime has been directly linked to the bank account.[174] More often than not,[9] clients do not consent to foreign tax authorities, which leaves only the latter (financial crime) provision available.[87] Many client services available in Switzerland (e.g.numbered bank accounts) are used to shield client data from tax authorities.[87]
Manysovereign states do not legally requireprivate bankers to confirm whether or not a client has paid their taxes, in any capacity.[175] On top of this,Switzerland's banking secrecy laws prohibit the disclosure of client information under a variety of federal, cantonal, and civil policies.[89] Many foreign nationals open Swiss bank accounts to take advantage of these laws and tax distinctions.[87] Whilecitizens of Switzerland retain the full force of banking secrecy protections, foreign clients are afforded some of the most stringentbank–client confidentiality protections in the world.[87] In exchange for banking services, the Swiss government charges "a low, lump-sum option on the money they bank", after which Swiss tax authorities consider client tax burdens "settled".[176] After theBanking Law of 1934 was passed, Swiss bankers traveled across Europe to advertise the country's banking secrecy duringWorld War II.[9] As European countries began toincrease taxes to finance the war, wealthy clients moved their holdings into Swiss accounts to avoid taxation.[9]
Swiss banks have collectively paid more than $12 billion in fines in recent years to the tax authorities in France, Germany, Italy, the United States and other countries for helping with tax evasion.[177] Starting in 2022, fines on Swiss banks abroad will be tax deductible (unlesscrime is involved).[178] In recent years, Swiss banks have also been fined by various international regulators billions of dollars forFOREX andLIBOR rates manipulations.
Banking in Switzerland, in particular Swiss banking secrecy practices, has been detailed in globalpopular culture to varying degrees of accuracy. According to official statements from the Swiss National Film Archives, inaccurate or exaggerated portrayals negatively impact Switzerland by reducing bankers to unflattering "caricatures" that are "ever disposed to accept funds from questionable sources".[179] In 2014, Sindy Schmiegel, a spokeswoman for theSwiss Bankers Association (SBA), stressed thatfinancial regulation in Switzerland is dramatically more strict than portrayed fictionally.[179]The Economic Times noted that popular culture portrays Swiss bank accounts as "completely anonymous", later adding "this is simply not true."[180]
Swiss banking is prominently featured in the following films andtelevision shows:
If you can't trust a Swiss banker, then what's the world come to?
Like most Swiss banks, our safe-deposit boxes are attached to anumber, not a name. You have a key and a personal number known only to you.
Declassified intelligence documents at the US National Archives show that one of Hitler's closest confidantes opened the accounts at the Union Bank of Switzerland in Bern after the Fuhrer's book became required reading in German schools.
The American-led attack on the Gnomes of Zurich has produced a backlash: a right-wing party has almost collected enough signatures to force a referendum on whether to strengthen constitutional support for financial secrecy. Swiss bankers who spill the beans continue to do so at their peril.
Several hunkered down in Switzerland, which refused to extradite its citizens to the United States for actions that weren't illegal in Switzerland. None had actually gone on trial.
{{cite web}}:|last= has generic name (help)If you blow the whistle you are socially and financially dead.
The subterranean vaults of Geneva and Zurich have served as sanctuaries for the wealth of dictators and despots, mobsters and arms dealers, corrupt officials and tax cheats of all kinds.
Before the Second World War, with the rise of Nazism, many Jews in Central and East Europe sought to protect a part of their assets by depositing money in Swiss accounts, and their valuables in Swiss safe deposit boxes. To encourage such transfers, in 1934 the Swiss even strengthened special banking secrecy laws which facilitated preservation of the anonymity of depositors.
A broker dealer, at the request of the customer, may open an account that is simply identified by a number or a symbol, as long as there is a statement signed by the customer attesting to the ownership of the account.
In fact, mystery writers have utilized the Swiss Bank as the central focus of intrigue. Where else would one think to store the secrets of the holy grail but in a Swiss bank account, as was the case in the novel the 'Da Vinci Code'. But events in recent years have chipped away at this polished veneer to reveal some rather unseemly criminal behavior.
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