Bank secrecy in Switzerland

Swiss banks and their staff are obligated to keep all data, documents, all sorts of relationships beteen bank and client, strictly private and confidential and are bound to respect clients private matters. The obligation to maintain banking secrecy applies to all those who are employed by or are members of any part of a bank, as well as to its auditors and the members of its board of directors. It continues even after termination of their employment (Federal Law on Banks and Savings Banks of 8 November 1934, Article 47). Any banker who divilges the private records of his client, or a third party, may face a jail sentence or be fined. Confidentiality is not, and has never been, absolute because it does not protect criminals. Swiss banks consider it to be of paramount importance for their financial centre to be free of criminal activities. One of the experts quoted saying that 'they wanted cleanest money in their banks'

Article 47 of the Federal Law on Banks and Savings Banks, was enacted on 8 November 1934. This article prohibits anyone who functions as an officer, employee, mandatory, liquidator or commissioner of a bank, as a representative of the Federal Banking Commission, or as an officer or employee of a recognized auditing company, from disclosing any information that a bank customer entrusts to them in this capacity. Article 273 of Swiss Penal Code punishes responsible persons of breaking the law. The convicted persons may face a jail sentence or fine upto CHF 30'000 CHF or both. The violation of bank customer confidentiality remains punishable even after the termination of the official or employment relationship or the exercise of the profession (Art. 47, Federal Law on Banks and Savings Banks).

Criminal Activities

Bank secrecy laws cannot be exploited and are NOT meant to shield criminals and criminial activities. Swiss authorities are increasingly cooperating with other International world countries to combat terrorism, drug trafficking, weapons smuggling, trafficking of women and children etc... Bank secrecy can be easily lifted, without the knowledge of the client by direct judicial orders. The swiss judge may request the clients records from the respective swiss bank, if the client is found to be involved in illegal criminal activities. Banking secrecy is not waived in cases of tax evasion (such as the mere non-declaration of income or assets). However, tax fraud (false invoices, false accounting, etc.) are criminal offenses. Whether they are committed in Switzerland or abroad, the judge trying the case has the right to obtain information on the accused's bank accounts.

Swiss Banks have no interest in money derived from illegal crimes and therefore had adopted strict measures in place to prevent unwanted money from entering the country. Identification of the customer, is very imperative for the swiss banks which forms the very important element of due diligence. The banks are required to know their customers, and make sure that their deposits are free from illegal activities. Most of the banks in switzerland would ask the client to show proof for economic origin of funds. Thus the identity of the client ALWAYS known to the bank and limited to certain bank staff. Also there is no such concept of 'anonymous banking' in switzerland. Your identity is always known to the bank.

Due to the recent international pressure and increasing criminal activities committed in switzerland, banks conduct due diligence of any body who wants to bank in switzerland. Banks do screen high volume of money flow in and out of any bank account for illegal activities. The banks always observes 'Know your customer' rules. That is why many brokers do ask for proof for economic origin of funds while opening your account. Visit International money laundering association

Bank secrecy is waived in switzerland, for the following reasons

- Funds from criminal activities, tax fraud, theft, crime, blackmail, money laundering
- Civil Proceedings / bankruptcy cases

For more information visit Swiss Bankers Association