The government of Switzerland has decided to prepare for relaxing its famed banking secrecy laws, a day after Liechtenstein, another traditional haven for safe parking of funds, decided to open up. Luxembourg, another prominent safety centre for such deposits, also announced today that it would disclose information if there is “explicit proof” of tax fraud. And Austria, a like case, also said today that it would open even without such clear proof, if a case is made of likely fraud.
This chain reaction follows a report earlier this week from the Paris-based “rich countries club”, the Organization for Economic Cooperation and Development (OECD), ahead of the coming meeting in London of the G-20 heads of government, where an end to such banking secrecy is high on the agenda. The OECD report has listed a number of “uncooperative” countries, regarding its earlier formulation of a set of strong rules proposed to curb secrecy on depositor identity in offshore tax havens.
Among the “uncooperatives” it listed are these four countries. Also listed are Monaco, Andorra and the Isle of Man in Europe, as are Hong Kong, and even Singapore. Germany and the UK have already said they will be pressing hard for “or else” action to end such secrecy on the identity of account-holders; the US has already ensured some landmark changes from Swiss bankers by threatening prosecution.
Germany began the current hardening of stances after a scandal erupted there last year, on a leading bank in Liechtenstein, LGT, having helped Germans to evade taxes.
Incidentally, several banking analysts believe that influential individuals from developing countries, India among these, maintain a huge pool of such funds in Swiss banks, for one; the talk is of upto $1.6 trillion in Switzerland held by Indians alone The Swiss Bankers Association denies the figure.
Liechtenstein said yesterday it is ready to negotiate new rules with both Germany and the UK to open information on wealthy foreigners wanting to hold undeclared accounts. The Swiss finance minister has now conceded that his country will be affected by Liechtenstein’s decision. The Swiss cabinet has now constituted a committee to decide how it should approach this issue, ahead of the negotiations with the European Union, which has adopted a strong stand for opening up.
Analysts say the Swiss government is now expected to make concessions on more transparency in cases of clear fraud. Under present Swiss law, foreign-held accounts are protected unless there is evidence of proceeds from drugs or bribes.