Financial Crime World

Swiss Banking Secrets: A Battleground for Financial Crime and Privacy

Switzerland, known for its discretion and wealth, has become a battleground for financial crime and privacy. The country’s banks have been at the center of numerous high-profile cases involving tax evasion, money laundering, and other financial misdeeds.

Money Laundering in Switzerland

  • Swiss banks serve as conduits for ill-gotten gains from around the world [1].
  • €68.2 billion ($74.9 billion) in suspected money laundering transactions were reported in Switzerland in 2018 [1].

Tax Evasion and the Swiss Financial Sector

  • Tax evasion is a persistent problem in the Swiss financial sector [2].
  • In response to international pressure, Switzerland signed Tax Information Exchange Agreement (TIEA) with the US in 2014 [2].
  • Since then, other countries have followed suit, leading to an increase in information sharing and a decrease in undeclared accounts.

Combating Financial Crime in Switzerland

  • The Swiss Financial Market Supervisory Authority (FINMA) is the primary regulator responsible for combating financial crime [3].
  • FINMA fined Credit Suisse almost CHF 30 million ($32.2 million) in 2018 for failing to prevent financial crime [3].

Balancing Secrecy and Transparency

  • Switzerland’s commitment to privacy and banking secrecy has put it at odds with the international community [4].
  • In response, Switzerland began to gradually liberalize its banking secrecy laws, implementing the Automatic Exchange of Information (AEoI) with over 100 countries [4].

The Automatic Exchange of Information (AEoI)

  • AEoI is not a panacea, Switzerland is still grappling with balancing commitment to secrecy and effectively combating financial crime.

[1] Basel Institute on Governance, “Money Laundering Risks: Global Comparison 2019,” Basel Institute on Governance, 2019, https://www.baselgovernance.org/en/Research/Pages/Money-Laundering-Risks-Global-Comparison.aspx.

[2] Swiss Federal Department of Finance, “Switzerland and the United States Sign a Historic Agreement on Automatic Exchange of Information,” Swiss Federal Department of Finance, January 1, 2014, https://www.admin.ch/gov/en/start/documents/communiques/2014/01/msg-2014-01-01-0049.html.

[3] FINMA, “Press Release: Credit Suisse AG Fined for Failure to Implement Adequate Measures to Identify and Report Money Laundering and Financing Terrorism Risks,” Swiss Financial Market Supervisory Authority, December 19, 2018, https://www.finma.ch/en/news/pressreleases/2018/12/2018-1155.html.

[4] Swiss Federal Department of Finance, “Switzerland and the European Union Reach Agreement on the Automatic Exchange of Information: Reporting Standard for Countries with which Switzerland has Concluded a Tax Information Exchange Agreement,” Swiss Federal Department of Finance, November 19, 2018, https://www.admin.ch/gov/en/start/documents/communiques/2018/11/msg-2018-11-19-037.html.