Banking secrecy

Discover the jurisdictions that respect your privacy

Banking secrecy

El Banking secrecy It is a legal requirement in some jurisdictions that prohibits banks from providing authorities with both personal and account information for their customers, except under certain exceptional conditions. In some cases, additional privacy is provided to cardholders through the use of numbered bank accounts or in other ways. Bank secrecy is frequent in some countries such as Switzerland, Lebanon, Singapore y Luxembourg, as well as in offshore banks and in other tax havens under voluntary or statutory privacy provisions.

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    Numbered bank accounts

    LNumbered bank accounts were first created in Switzerland through the Swiss Banking Law of 1934, where the principle of bank secrecy is still considered one of the main pillars of private banking. Switzerland has received some criticism from governments and NGOs that bank secrecy can become a problem if it is used to evade taxes or finance crime.

    For this reason, the Swiss Parliament ratified on June 17, 2010 an Agreement with the United States that would allow UBS to report to the US authorities information regarding 4,450 US UBS clients suspected of tax evasion.

    Advances in financial crypto could allow the use of anonymous electronic money and completely anonymous digital bearer certificates that promote financial and banking privacy over the Internet, thanks to various institutions authorized to do so (for example, issuers of such certificates and digital cash).

    Know everything that bank secrecy offers

    History of bank secrecy in the world

    The world's first law on bank secrecy

    The pioneering jurisdictions

    Switzerland
    KYC
    International pressure

    E

    he bank secret was coded in Switzerland by the Federal Law of Banks and Savings Banks of 1934, after a public scandal in France, when Deputy Fabien Albertin denounced the tax evasion of eminent French personalities, including politicians, judges, and other important personalities who were hiding their money in Switzerland. The Peugeot brothers and François Coty, from the famous perfume family, were on his list. Since then, the Swiss banks They have become world famous for their numbered bank accounts, which critics like various NGOs allege are only helping to legalize tax evasion, money laundering, and the shadow economy.

    Bgarlic the Swiss principle of bank secrecyPrivacy is legally enforced, with Swiss law strictly limiting any banking information shared with third parties, including tax authorities, foreign governments or the Swiss Administration itself, except when required by a Swiss court order. However, banking is not strictly anonymous as, under its banking law, all Swiss accounts, including numbered ones, are linked to an identified person according to the policies KYC (Know your Customer). This law only allows a bank to share information with others in cases of serious criminal acts. For example, if they identify a terrorist account or that of a client accused of tax fraud. However, simply not filing taxable income is not a crime. In April 2013, French Minister JΓ©rΓ΄me Cahuzac was forced to resign when the Geneva prosecutor, acting quickly on a French request related to tax fraud, found evidence of undeclared Swiss accounts.

    BUnder pressure from the G20 and the OECD, the Swiss government announced in March 2009 that it would abolish the distinction between tax fraud and tax evasion in relations with foreign clients. The distinction is still valid for national clients. (See change of tax residence). Any bank employee who violates a customer's privacy could be severely punished by law. After signing 12 new double taxation agreements in accordance with the international standard established by the OECD, Switzerland it was removed from the gray list of non-compliant tax jurisdictions.

    international banking consultants

    The end of bank secrecy for non-residents in Switzerland is near

    Attention to non-residents

    OECD
    Bank privacy

    En October 2013, the Swiss government stated that it intended to sign an international agreement sponsored by the OECD (Automatic Exchange of Tax Information) which, if ratified by Parliament, will align Swiss banking practices with those of other countries and end with the special secret that Swiss bank customers are enjoying.

    Following the bank cases of UBS and Julius Baer, ​​some wealthy customers who continue to use offshore accounts are turning to private banks in Singapore y Hong Kong. In addition to local banks in Singapore or Hong Kong, offices have been opened in these locations by several Swiss private banks. Moving to Singapore and Hong Kong is an alternative to bank secret that Swiss banks have been under attack. Singapore has bank secrecy provisions comparable to those of Switzerland. Although Hong Kong does not have the same bank privacy laws, it offers flexibility in creating opaque companies that can offer the same degrees of privacy.

    Mmany offshore banks, located in paraΓ­sos fiscales As in the Cayman Islands and Panama, they also have strict privacy laws.

    On May 27, 2015, Switzerland signed an agreement with the EU It will align the practices of Swiss banks with those of EU countries and end the special secrecy that Swiss bank customers have had in the past. Under the agreement, both Switzerland and the EU countries will automatically exchange information about the financial accounts of each other's residents from 2018 (see CRS)

    United States law responds to bank secrecy

    United States Strikes Back

    La United States Bank Secrecy Act (or BSA) 1970 requires financial institutions to help government agencies detect and prevent money laundering. Specifically, the law requires financial institutions to maintain records of cash purchases of negotiable instruments, submit reports of cash transactions that exceed $ 10,000 (per day), and report suspicious activities that could mean money laundering, tax evasion, or other Criminal activities.

    In addition, to control tax evasion, the United States government approved in 2010 the Foreign Account Tax Compliance Act (better known as FATCA). Said document establishes the mechanisms to identify US citizens and residents who have money or funds deposited in foreign financial institutions. This requires all financial institutions outside of Mexico to be compulsorily required. United States that identify and report the citizens and residents of the United States who have deposits and investments in those banks. They must make available to the IRS (Internal Revenue Service is the United States tax authority) information related to accounts and financial products of such persons.

    European actions against bank secrecy

    LEuropean countries had long complained that the provisions on bank secrecy in Austria, Liechtenstein, Luxembourg y Switzerland they favored the tax evasion of their citizens, particularly from countries such as Belgium, France, Germany and Italy that share a border with one or more of those countries. In 2009 tensions between the two sides intensified and France, Germany, Italy and Spain (supported to some extent by other countries) raised the issue with the OECD and the G20. As a result, essentially all countries agreed to implement tax treaties that would facilitate exchange of bank information in case of suspected tax evasion.

    In 2013, Swiss President Ueli Maurer defended bank secrecy and declared that it is "comparable" to medical confidentiality, and that "the state must absolutely respect the private sphere" and must not know "what is in your bank account."

    Information is power

    SIf you want to know more about the main tax havens in the world, feel free to visit The daily offshore news, our news portal related to the latest news on tax havens.
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