Swiss Banking Laws

By: Tunoy Mukherjee 2011

History
Over 300 years First known dates back to 1713 Until 1934, civil and labor code 1934, criminal domain Why?
Nazi Spies Pressure from French

1984, Swiss elected by overwhelming majority in favor of maintaining bank secrecy 2

The Swiss universal bank offers

credit/lending business asset management and investment advice payment transactions deposit business (savings accounts, etc.) securities business (stock exchange transactions) underwriting business (issuing of bonds) financial analysis

Legislation
Banking Act of 1934 Codified 8 November 1934 Privacy is statutorily enforced Swiss law strictly limiting any information shared with third parties, including tax authorities, foreign governments or even Swiss authorities, except when requested by a Swiss judges subpoena 4

Key Provisions
Regulated by both civil law and criminal law 2 Articles of the Swiss criminal code regulate Swiss bank secrecy:
Article 162 takes punitive action against the disclosure of trade secrets or confidential business information. Article 320 deals with occupational confidentiality.

Article 98 al. 2 of the Swiss Labor Code

Anyone who contravenes an obligation to abstain from action owe 5 damages by the very fact of contravention

Key Provisions
Article 47 of the Swiss Federal Banking Act of 8 November 1934
Reveal = Imprisonment of 6 months or 50,000 francs Negligence = 30,000 francs Termination = Still Punishable Provisions of federal and cantonal legislation to be obligated to inform authorities and testify in court

Major Problems
The Swiss do not feel it is their position to be the global babysitter Swiss banks are not just institutions in which money is stored. The banking industry accounts for 10% of Switzerlands GDP, so they are heavily invested in maintaining their clients satisfaction 7

 Failure to declare earnings of non-Swiss citizens (tax evasion) is not a crime in Switzerland, and therefore Swiss banks see no reason to offer information Sharing client information with other parties, where no crime is suspected, is an offence under Switzerland's banking laws

Tax Evasion

Swiss bank accounts are used by

Corrupt Government officials Millionaires Criminals to hide ill-gotten wealth Middle class people People staying in countries with unstable government

Limitations Bank Secrecy

Exceptions Regulated by Law Criminal Matters
Drug Trafficking Gun Smuggling

Private Matters
Inheritance Divorce Bankruptcy

In terms of divorce or inheritance, plaintiff faces long, difficult, and costly procedure. No undertaking has been successful Bankruptcy falls under Federal law
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Rare

Financial market laws of the Swiss Federal Assembly

Swiss Federal Law of 8 November 1934 on Banks and Savings Banks (Banking Act, BA) Swiss Federal Act of 24 March 1995 on Stock Exchanges and Securities Trading (Stock Exchange Act, SESTA) Swiss Federal Act of 23 June 2006 on Collective Investment Schemes (Collective Investment Schemes Act, CISA) Federal Act of 10 October 1997 on Combating Money Laundering and Terrorist Financing in the Financial Sector (AntiMoney Laundering Act, AMLA) Mortgage Bond Act of 25 June 1930 (MBA) Swiss Federal Act of 17 December 2004 on the Supervision of Insurance Companies (Insurance Supervision Act, ISA) Swiss Federal Act of 2 April 1908 on Insurance Contracts (Insurance Contract Act, ICA)