The Hindu Business Line : Swiss banking

As a former head magistrate in Switzerland responsible for matters of international legal assistance I’d like to add a few remarks to the image of “The colour-blind Swiss” (Business Line, September 16). Every country is worried these days about funds leaving the domestic financial market. India, just like Switzerland, is also trying to find ways of protecting its economy. But there are certain stories about Switzerland that are just not true. The “anonymous Swiss bank account” where the client’s identity is unknown does reflect a myth rather than the truth.

Since roughly 30 years Switzerland has been among the countries with probably the highest standards in client identification and KYC (know your customer) rules. Judicial authorities have basically unlimited access to bank accounts in the course of an investigation. There are, however, no statistics on non-declared funds in Switzerland nor does the term “black money” exist in the Swiss legal vocabulary.

Perhaps there is a fairly obvious reason for this: In the Swiss legal system the tax authorities do not have access to taxpayers’ bank accounts except in cases of aggravated tax fraud; and tax authorities cannot confiscate taxpayers funds but must obtain a court order, like any other creditor.

The Swiss believe that it is the citizens that run the system and not the other way round. Therefore the Swiss tax system is built on self-declaration rather than on governmental control. It is thus not only foreign account holders that profit from a basically untouched sphere of privacy but also the Swiss themselves.

Regarding the Bofors case and its difficulties, one must remember that in 1997 the Swiss International Mutual Legal Assistance Act was completely overhauled. In the new system only one appeal against the magistrate’s final decision is allowed at the end of the legal assistance procedure. Most cases can, therefore, be handled (i.e. documents are transferred to the requesting authority) within a few months. This, I believe, is a remarkable result, even compared with international standards.

David Zollinger Member, Exec Committee Wegelin & Co. Pvt Bankers Zürich, Switzerland

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