Banking in Switzerland began in the early 18th century through the trade of Swiss merchants and, for centuries, grew into a complex, regulated, and international industry. Along with the Swiss Alps, Swiss chocolate, watchmaking and mountain climbing, banking is seen as a symbol of Switzerland. Switzerland has a long history of banking secrecy and client confidentiality that reaches back to the early 1700s. Beginning as a way to protect the interests of rich European banking, Swiss banking secrecy was codified in 1934 with the enactment of important federal laws, the Federal Law on Banks and Savings Bank.
The controversial protection of foreign accounts and assets during World War II triggered a series of proposed financial regulations that tried to stifle bank secrecy from being too successful. Switzerland, considered the "grandfather of bank secrecy", has been one of the largest offshore financial centers and tax havens in the world since the mid-20th century. Despite the international drive to significantly roll out the country's banking secrecy laws, Swiss social and political forces have been minimized and returned many of the proposed roll-backs. Disclosing client information has been considered a serious social and criminal offense since the early 1900s. Employees working in Switzerland and abroad in Swiss banks "have long followed an unwritten code similar to that observed by doctors or priests". Since 1934, banking secrecy laws have been violated by four people: Christoph Meili (1997), Bradley Birkenfeld (2007), Rudolf Elmer (2011), and HervÃÆ'Â © Falciani (2014). After an insurmountable professional setback, everyone was fired or resigned from their bank, with federal arrest warrants and fines.
The Swiss Bankers Association (SBA) estimates by 2018 that Swiss banks have assets of US $ 6.5 trillion or 25% of all global cross-border assets. The main Swiss language hubs, Geneva (for France), Lugano (for Italy), and ZÃÆ'¼rich (for Germany) serve different geographic markets. It consistently ranks in the top three states on the Financial Secrecy Index and is named first, the last in 2018. The three largest banks-UBS, Credit Suisse, Julius BÃÆ'¤r-are all governed by the Swiss Financial Market Supervisory Authority (FINMA) and the Swiss National Bank (NSB) which takes its authority from a series of federal laws. Banking in Switzerland historically plays, and still continues to play, a dominant role in the Swiss economy and society. According to the Organization for Economic Cooperation and Development (OECD), total banking assets amount to 467% of total gross domestic product. Banking in Switzerland has been described, with varying degrees of accuracy, in the overall popular culture, books, movies, and television shows.
Video Banking in Switzerland
Histori
During the 18th century, Swiss mercenaries brought home funds from their contracts that helped the Swiss bank begin. Banking began in the eighteenth century through merchant wealth. Wegelin & amp; Co., established in 1741, is the oldest bank in Switzerland until it is restructured into a new legal entity in 2013. Hy Hentsch & amp; Co. banks and Lombard Odier, both founded in 1796 in Geneva as private banks, and The Pictet Group was founded in 1805 as a merchant bank. Hentsch & amp; Cie was a founding member of the Swiss National Bank during 1852.
Maps Banking in Switzerland
The Swiss economy
Switzerland is a prosperous country with higher per capita gross domestic product than most Western European countries. The Swiss franc (CHF) is relatively stable compared to other currencies. Swiss neutrality and national sovereignty, long recognized by foreign countries, have encouraged a stable environment for the banking sector to thrive and develop. Switzerland maintained neutrality through both World Wars, not EU members, and did not join the United Nations until 2002. The Bank of International Settlements (BIS), an organization that facilitates cooperation among the world's central banks, is based in Basel. Founded in 1930, the BIS chose to seek in Switzerland because of state neutrality, which is important for organizations founded by countries that have been enemies in World War I.
Banking has played a dominant role in the Swiss economy for two centuries. According to the Organization for Economic Cooperation and Development (OECD), total banking assets amount to 467% of total gross domestic product.
Rule
Swiss Financial Market Supervisory Authority (FINMA) is a public legal body that oversees most banking related activities as well as securities and investment funds markets. The regulatory authority comes from the Swiss Financial Market Supervisory Act (FINMASA) and Article 98 of the Swiss Federal Constitution. The Office of the Swiss Banking Ombudsman, founded in 1993, is sponsored by the Swiss Banking Ombudsman Foundation, founded by the Swiss Bankers Association. Ombudsman services, which are offered for free, include mediation and assistance to people looking for inactive assets. The Ombudsman handles about 1,500 complaints filed against the bank each year.
Banking secrets
History
Secrets of banks in the Swiss region can be traced to the Supreme Council of Geneva which prohibited the disclosure of information about the upper classes of Europe in 1713. As a way of avoiding the Protestant banking system, the Catholic French Kings kept their holdings in the Geneva account. During the 1780s, Swiss bank accounts began to insure deposits that contributed to their reputation for financial security. In 1815, the Vienna Congress formally established the Swiss international neutrality that led to the entry of large capital. The rich and landlocked Switzerland sees banking secrecy as a way to build a monarchy similar to France, Spain and Britain. The Swiss historian SÃÆ' Â © bastian Guex noted in The Origin of Swiss Secrets Bank Account :
This is what the Swiss bourgeoisie thinks: 'That is our future. We will play on the contradictions between European powers and, protected by our neutrality shield, our arm will become industry and finance. '
After the small-scale civil war of the 1840s between the Swiss cantons, the Swiss Federation was founded in 1848. The formation of the state, through direct democracy, contributed to the political stability necessary to maintain banking secrecy. The Swiss mountain region provides a natural environment for digging underground vaults to store gold and diamonds. During the 1910s, Swiss bankers traveled to France to advertise banking secrecy during World War I. The contribution of the war to political and economic instability prompted a rapid capital movement into Switzerland. As European countries began raising taxes to finance the war, wealthy clients transferred their holdings to Swiss accounts to avoid taxes. France swerved in Geneva, Italy in Lugano, and Germany in Zurich. When disclosing client information was a civil violation in Switzerland for centuries, the Swiss Federal Assembly made it a federal offense in 1934 with the passage of important laws, the Federal Law on Banks and Savings Bank. The everyday language is known as the 1934 Banking Law or the Swiss Banking Act of 1934, it codifies banking secrecy. The Federal Assembly enacted a law to quell controversy over allegations of tax evasion against wealthy French businessmen, military generals, and Catholic bishops. Additional provisions, Article 47 (b), were drafted prior to the ratification to protect the Jewish assets of the Nazi party.
Along with the protection of German Jewish assets, Swiss banks collaborate with Nazi Germany and their allies by storing their gold and cash balances in underground vaults. Adolf Hitler maintains an account at Union Bank of Switzerland (UBS) estimating 1.1 billion Reichsmarks. After the United States formally asked banks to transfer money in the 1990s, UBS sent Reichsmarks worth 400 to 700 million US dollars to US authorities. Swiss banking regulations limit the number of orphaned assets allowed to leave bank custody. UBS, with the approval of the Swiss government, froze accounts containing Hitler's assets indefinitely, and bypassed Reichsmarks, removing the value of the currency. During World War II, UBS also maintained accounts for hundreds of German Jewish businessmen and households. After the Banking Act of 1934 was passed, the bank aggressively protected the assets of "the Nazi enemies of Germany". When Hitler announced (canceled) the Swiss invasion in 1940, UBS contracted the Swiss Armed Forces to blockade their retail bank and transport Jewish assets to the military underground bunker. Swiss Bank Corporation (SBC) and Credit Suisse, did the same but together with UBS, they were fined hundreds of millions of dollars in reparations for their dealings with Nazi Germany. Throughout the 1980s and 1990s, many international proposals to restore bank secrecy made by foreign countries with little success.
After the 2008 financial crisis, Switzerland signed the European Union Savings Tax Directive (EUSTD) which requires Swiss banks to report to 43 European countries that do not identify annual tax statistics. On December 3, 2008, the Federal Assembly increased prison sentences for banking secrecy violations from a maximum of six months to five years. In late 2008, following an international multi-country investigation of Swiss roles in US tax evasion, the Swiss government signed a Dedicated Prosecution Agreement (DPA) with the US Department of Justice. The agreement initiated important Disclosure of Birkenfeld information on more than 4,000 clients.
In another step towards loosening banking secrecy, Switzerland signed the U.S. Foreign Account Tax Compliance Act (FATCA), having rejected it twice in parliament. FATCA requires Swiss banks to disclose US client information that does not identify annually to the Internal Revenue Service. This Agreement does not guarantee the transfer of semi-automatic information, which remains at the discretion of Swiss government authorities. If the client does not agree to share the information with the IRS, Swiss law prohibits disclosure. If the client agrees, the Swiss bank sends IRS tax-related information about the account holder but is prohibited from disclosing the identity in accordance with Article 47 of the Banking Act of 1934. The 2018 Financial Secrecy Index states: "This does not mean that Swiss banking secrecy is complete, encouraging news... the offense is partial.
In March 2015, the Swiss government entered into a bilateral "Rubik Agreement" agreement with Germany, Austria and the United Kingdom allowing foreign holders of Swiss bank accounts to retain their anonymity in exchange for repayment of specified taxes. Switzerland adopted the International Convention on Automated Information Exchange of Banking (AEOI) in 2017, agreed to automatically release limited financial information to certain countries for tax audit purposes. This Agreement includes Joint Reporting Standards (CRS) which requires Swiss banks to automatically send foreign tax authorities the name of the client, address, domicile, tax number, date of birth, account number, account balance at the end of the year, and gross investment income. However, CRS did not rule out the Swiss Banking Act of 1934, so that client's withdrawals and investments were not disclosed. Thus, the tax authorities can not "lure" to tax evaders, they must directly link financial crimes with client accounts. Disclosed information can be only used for tax audits and Swiss authorities may prevent disclosure.
In December 2017, the Swiss parliament launched the initiative and expressed an interest to formally instill banking secrecy in the Swiss Constitution which makes it a constitutional right protected by the federal government. In January, 2018, a US district court ruled that Swiss bankers "had nothing to do with the American taxpayer's choice to not declare offshore assets", then clarify them should not be seen as facilitating tax evasion but rather providing legal services made illegal by client. The Swiss Ministry of Justice announced in March 2018 that disclosure of client information in pending court cases involving Swiss banks is subject to espionage and federal extortion charges in addition to fees associated with banking secrecy laws.
The modern secrets
Switzerland, considered the "grandfather of bank secrecy", has been one of the largest offshore financial centers and tax havens in the world since the mid-20th century. Despite the international drive to significantly restore the country's banking secrecy laws, Swiss social and political forces have been minimized and return much of the proposed rollback. Disclosing client information has been considered a serious social and criminal offense since the early 1900s. Whistleblower, despite legal protection, has been treated with hostility from the public and often faces professional left-backs in Switzerland. Swiss bankers who maintain an office exclusively in Switzerland are protected from foreign lawsuits, extradition requests and criminal charges, as long as they remain in the jurisdiction of state law. Despite the slight adjustment to bank secrecy, bankers working in Switzerland and abroad in Swiss banks "have long embraced unwritten codes similar to those observed by doctors or priests". The main Swiss language hubs, Geneva (for France), Lugano (for Italy), and ZÃÆ'¼rich (for Germany) serve different geographic markets. It consistently tops the top three on the Financial Secrecy Index and is named the first time many times, lastly in 2018. The Swiss Bankers Association estimates by 2018 that Swiss banks have assets of $ 6.5 trillion or 25% of the entire global cross-border. assets.
The law of secrecy has been violated by four people since 1934: Christoph Meili (1997), Bradley Birkenfeld (2007), Rudolf Elmer (2011), and HervÃÆ' © Falciani (2014). In all four cases, the complainants were presented with federal arrest warrants, fines, and continuing professional retrogression in Switzerland.
Bank domes and bunkers
A number of larger Swiss banks operate undisclosed or secret confidential bank deposits, storage facilities or underground bunkers for gold bars, diamonds, or other valuable physical assets. Most of these underground bunkers are located near or in the foothills of the Swiss Alps area. These facilities are not subject to the same banking regulations as Swiss banks and do not need to report ownership to regulatory bodies. The Swiss defense department estimates that of the ten former military bunkers available for sale, six of them were sold to Swiss banks for home assets during the 1980s and 1990s. Storage in underground bunkers and bank safes is usually reserved for clients who pass multi-stage security permits. Some of these bunkers are not accessible by road or by foot and require plane transportation.
Numbered bank account
Many banks in Switzerland offer bank accounts with client numbers, accounts where the holder's identity is replaced by a multi-digit number known only to the client and chooses a private banker. Although these accounts add another layer of banking secrecy, they are not completely anonymous because the client's name is still recorded by the bank and subject to limited disclosure and guaranteed. Some banks in Switzerland add numbers with code names such as "Cardinal", "Octopussy" or "Cello" that identify clients, alternatively. However, in order to open this type of account in Switzerland, the client must pass a multi-stage cleaning procedure and prove to the legitimate origin bank of their assets.
Tax evasion
Many sovereign states do not legally require private bankers to confirm whether clients have or have not paid their taxes, in any capacity. On top of this, Swiss banking secrecy laws prohibit the disclosure of client information under various federal, cantonal, and civilian policies. Many foreigners open Swiss bank accounts to take advantage of these laws and tax differences. While Swiss citizens maintain full power protection banking secrecy, foreign clients are given some of the strictest bank-client confidentiality protection in the world. In exchange for banking services, the Swiss government imposes a "low-cost, simultaneously for bank money" option, after which the Swiss tax authorities consider the client's "completed" tax burden. After the Banking Act of 1934 was passed, Swiss bankers traveled across Europe to advertise banking secrecy during World War II. As European countries began raising taxes to finance the war, wealthy clients transferred their holdings to Swiss accounts to avoid taxes.
According to the Financial Secrets Index 2018, Swiss banking secrecy laws have made it the ultimate tax haven since the 1900s. One of the most prominent attractions against disclosure protection laws is the difference between tax avoidance (not reporting income) and tax fraud (active fraud). Aware of the difference between legal tax evasion and illegal tax evasion in the US, not reporting income is just a civil violation in Switzerland while tax fraud is a financial crime. When a foreign client deposits a deposit into a Swiss bank account, the bank is legally prohibited from disclosing the balance or client information to the tax authorities. This prohibition can only be waved if the client has produced a statement of written consent or financial crime has been directly related to the bank account. More often than not, clients do not approve of foreign tax authorities that leave only the last available circumstances. Many client services available in Switzerland (such as numbered bank accounts) are used to protect client data from tax authorities.
Violations of banking secrecy laws in Switzerland are automatically processed in accordance with Article 47 of the Banking Act 1934: those disclosing client information subject to a maximum of five years in prison and 250,000 francs (EUR215,000 or US $ 250,000) in fines. Reporters and leakers of client information often face hostility from the public and maintain a professional set back. Accused of being a criminal in Switzerland, a federal arrest warrant has been imposed for Bradley Birkenfeld since 2008, after it disclosed UBS client information to the US Internal Revenue Service in 2007. After the 2008 financial crisis, the Swiss Parliament initiated a series of international tax treaties rolled return the protection of banking secrecy to foreign clients in response to pressure from the EU, the United States, and the UK. Although it has implemented nearly 50 information-shifting agreements and many restrictions for banking secrecy protections for foreign clients, Switzerland has been ranked among the top three tax-free countries in the world each year since the financial crisis, most recently in 2018.
Suspected connection to illegal activity
According to CBS News, Swiss banks in Geneva and Zurich have served as a safe haven for the wealth of dictators, fools, mobsters, arms dealers, corrupt officials, and fraudsters.
Large banks
In 2018, there are more than 400 securities dealers and banking instituons in Switzerland, ranging from "Two Big Banks" to small banks that serve the needs of one community or some special clients. Switzerland's biggest and second largest banks are UBS Group AG and Credit Suisse Group AG, respectively. They account for more than 50% of all deposits in Switzerland; each has a vast network of branches across the country and most of the international centers. Due to its size and complexity, UBS and Credit Suisse are subject to extra supervisory levels from the Federal Banking Commission.
UBS
UBS Group AG emerged in June 1998, when Union Bank of Switzerland, founded in 1862, and Swiss Bank Corporation, founded in 1872, merged. Headquartered in Zurich and Basel, it is Switzerland's largest bank. It maintains seven major offices around the world (four in the United States and one each in London, Tokyo, and Hong Kong) and branches on five continents.
Credit Suisse
Credit Suisse Group is Switzerland's second-largest bank. Based in Zurich and established in 1856, Credit Suisse offers private banking, investment banking, and asset management services. The company acquired First Boston Corporation in 1988 and joined the insurance company Winterthur in 1997; which was last sold to AXA in 2006. Asset management services were sold to Aberdeen Asset Management during the 2008 financial crisis.
Other banks
Central Bank
Swiss National Bank (SNB) serves as the country's central bank. Established by the Federal Act at Swiss National Bank (January 16, 1906), the company began business on June 20, 1907. Its shares were traded publicly, and held by cantons, cantonal banks, and individual investors; the federal government does not hold any shares. Although central banks often have regulatory authority over the state banking system, the SNB does not; regulation is solely the role of the Federal Banking Commission.
Raiffeisen Bank "assumes the role of the central bank" in providing treasury services, and is the third largest group of 328 banks in 2011, 390 in 2012 with 1,155 branches. During February 2012, P. Vincenz was chief executive. During January, announcements were made that the Wegelin & amp; non-US. Co., the oldest Swiss bank, will be bought by the Raiffeisen group. This group has 3 million plus clients in Switzerland.
Private bank
The term private bank refers to a bank offering private banking services and in its legal form is a partnership. The first private bank was created at St. Gallen in the mid-18th century and in Geneva at the end of the 18th century as a partnership, and some still in the hands of native families such as Hottinger and Mirabaud. In Switzerland, such private banks are called private bankers (protected terms) to distinguish them from other private banks that are usually joint ventures. Historically in Switzerland a minimum of CHF1 million is required to open an account; however, over the past years many private banks have lowered their entry barrier to CHF250,000 for private investors.
Local bank
There were, in 2006, 24 cantonal banks; these banks are semi-government organizations guaranteed by the state controlled by one of 26 cantons in Switzerland involved in all banking business. The largest cantonal bank, Zurich Cantonal Bank, has a 2005 net profit of CHF810 million.
In popular culture
Banking in Switzerland, in particular Swiss banking secrecy practices, has been detailed in popular global culture with varying degrees of accuracy. According to an official statement from the Swiss National Film Archive, inaccurate or exaggerated depictions have negatively impacted Switzerland by reducing bankers to an unattractive "caricature" that has "been discarded to receive funding from questionable sources". In 2014, Sindy Schmiegel, a spokesman for the Swiss Bankers Association (SBA), stressed that financial regulation in Switzerland is dramatically more stringent than fictitiously described. The Economic Times notes that popular culture describes Swiss bank accounts as "wholly anonymous" then adds "this is simply not true."
Swiss banking is prominently featured in the following films and television shows:
- The Great Spy Chase (1964): Francis Lagneau (Lino Ventura) is involved with Swiss bankers to open bank accounts that contain patents for powerful weapons. The film is considered the first film to refer to banks in Switzerland.
- Swiss banking has been mentioned by James Bond in movies and literature dozens of times, it plays a central role in: Goldfinger (1964): James Bond (Sean Connery) foiled Goldfinger's plan to rob US gold deposit often cite the underground gold bunker of Switzerland and bank account number as motivation. The film was written after Switzerland's role in World War II was at the forefront of international criticism on bank secrecy.
- In His Majesty's Secret Service (1969): supervillian Ernst Stavro Blofeld (Telly Savalas) told James Bond (George Lazenby) that unless large sums were deposited into Swiss bank accounts, and kill thousands of people. The term Swiss banking in the James Bond novel has been seen as "reinforcing stereotypes".
- World Not Enough (1999): James Bond (Pierce Brosnan) visits a Swiss bank in Spain called La Banque Suisse de L'Industrie to meet a partner before jumping out from the five-story window.
- Casino Royale (2006): After a high poker bet is over, James Bond's (Daniel Craig) victory is transferred to a Swiss bank account for security.
See also
- List of Swiss financial market regulations
- List of banks in Switzerland
References
Bibliography
External links
- Swiss Financial Center, from swissworld.org
Source of the article : Wikipedia
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