Recently, the Swiss Bank firm UBS was directed by the US Justice department to give access to some of its customers who "used" the Swiss Bank secrecy laws in hiding billions of assets, thereby evading taxes. This was followed by another lawsuit filed by the US in Miami asking for bank information on 52000 US customers who could have potentially stashed away billions of dollars from the eyes of the IRS.
This is however nothing new for US lawmakers. In the 80s, during the height of the Wall Street insider trading days, Swiss bank accounts in safe havens like the Caribbean Islands served as popular destinations for hiding millions of dollars swindled by greedy Wall Street traders. The SEC during its investigations struggled hard in accessing the details of these account holders as the banks were unwilling to cooperate. Although, they eventually succeeded in arm twisting some banks to comply, we never know how many got unnoticed.
Swiss bank laws support a very strong secrecy pact that in effect prevents anyone not authorized by the account holder, from accessing account details. This applies even to governments seeking information on any suspected individuals. The reasoning as one Swiss official put it in a NPR radio interview is to protect the privacy of the account holder and the safety of his assets. This has been evangelized over the years by the Swiss government and still continues to be their selling point. However, I think this is one among the many bad aspects of nations that can deviate from ethics as long as money flows into their pockets. Unfortunately, Switzerland is considered as one among the most "developed" nations in this world while they have virtually created a scheme to attract "bad" money from greedy people around the world.
There is enough information in the internet talking about the kind of people that Swiss banks attract. On the contrary, Swiss banks have also come up with how clean their customers are and the controversy around their practices. Swiss banks have come a long way in better monitoring their operations and the background of their customers. Unfortunately, this only came about after all the pressure generated by other nations in exposing their banking practices over the past 40 years.
Unfortunately, the banks have not realized the ethics of their practices from a human perspective. When Swiss laws do not act immediately on tax avoidance but only on tax fraud issues, this just becomes a greedy game of money laundering. For example, if a celebrity client from a "developing" nation deposits $10 MM in a Swiss bank account, he could possibly be doing it without the knowledge of the local government's tax department. There could be no other reason why someone would put huge sums of money into a foreign bank. The argument that these banks provide a greater return cannot be true as they are mostly comparable to other banks in the world. "Secrecy" in maintaining a bank account is desirable only when you don't want a greater authority to know what you are doing with your money or from where you are getting it. Any other kind of privacy or secrecy is provided even by a rural bank in a struggling "developing" nation.
By making a glaring distinction on legal grounds between tax avoidance and tax fraud, this country had been largely benefiting itself and rapidly growing it's economy by attracting money from abroad. Although proponents of capitalism have legally and morally justified human greed, they have not figured a way to identify the limits of ethical behavior. If a celebrity in India deposits 10 crores in Indian currency (which is easy for them to earn in a year), an equivalent of $2MM dollars is being deposited in a Swiss bank. That money through the banking system will eventually reach Wall Street or fund bonds offered by a Swiss global corporation. The Indian government on the other hand is sitting to lose 30% of that amount (given the high tax rate the government charges due to its inability to raise money through other resources) or the equivalent of $600K, which in Indian currency is a respectable sum. Less than 5% of the country pays taxes in the first place. Even with an insensible government in place, $600K can be used to fund huge infrastructure projects in the country to truly alleviate "materialistic" poverty. Swiss bank accounts are hardly opened by a middle class person in any "developing" nation. I don't even believe any ordinary person will go out of the way to deposit a few 1000 dollars in such banks. By having countries act like safe havens for rich tax evaders (or avoiders), these banks are severly violating the ethics of human behavior that would be so well expected from a nation that belongs to a World group that recommends how other countries should run their lives. It is time Swiss banks stop this so called secrecy pratice and actually promote a more open banking system that benefits the entire World in moving forward.
This is however nothing new for US lawmakers. In the 80s, during the height of the Wall Street insider trading days, Swiss bank accounts in safe havens like the Caribbean Islands served as popular destinations for hiding millions of dollars swindled by greedy Wall Street traders. The SEC during its investigations struggled hard in accessing the details of these account holders as the banks were unwilling to cooperate. Although, they eventually succeeded in arm twisting some banks to comply, we never know how many got unnoticed.
Swiss bank laws support a very strong secrecy pact that in effect prevents anyone not authorized by the account holder, from accessing account details. This applies even to governments seeking information on any suspected individuals. The reasoning as one Swiss official put it in a NPR radio interview is to protect the privacy of the account holder and the safety of his assets. This has been evangelized over the years by the Swiss government and still continues to be their selling point. However, I think this is one among the many bad aspects of nations that can deviate from ethics as long as money flows into their pockets. Unfortunately, Switzerland is considered as one among the most "developed" nations in this world while they have virtually created a scheme to attract "bad" money from greedy people around the world.
There is enough information in the internet talking about the kind of people that Swiss banks attract. On the contrary, Swiss banks have also come up with how clean their customers are and the controversy around their practices. Swiss banks have come a long way in better monitoring their operations and the background of their customers. Unfortunately, this only came about after all the pressure generated by other nations in exposing their banking practices over the past 40 years.
Unfortunately, the banks have not realized the ethics of their practices from a human perspective. When Swiss laws do not act immediately on tax avoidance but only on tax fraud issues, this just becomes a greedy game of money laundering. For example, if a celebrity client from a "developing" nation deposits $10 MM in a Swiss bank account, he could possibly be doing it without the knowledge of the local government's tax department. There could be no other reason why someone would put huge sums of money into a foreign bank. The argument that these banks provide a greater return cannot be true as they are mostly comparable to other banks in the world. "Secrecy" in maintaining a bank account is desirable only when you don't want a greater authority to know what you are doing with your money or from where you are getting it. Any other kind of privacy or secrecy is provided even by a rural bank in a struggling "developing" nation.
By making a glaring distinction on legal grounds between tax avoidance and tax fraud, this country had been largely benefiting itself and rapidly growing it's economy by attracting money from abroad. Although proponents of capitalism have legally and morally justified human greed, they have not figured a way to identify the limits of ethical behavior. If a celebrity in India deposits 10 crores in Indian currency (which is easy for them to earn in a year), an equivalent of $2MM dollars is being deposited in a Swiss bank. That money through the banking system will eventually reach Wall Street or fund bonds offered by a Swiss global corporation. The Indian government on the other hand is sitting to lose 30% of that amount (given the high tax rate the government charges due to its inability to raise money through other resources) or the equivalent of $600K, which in Indian currency is a respectable sum. Less than 5% of the country pays taxes in the first place. Even with an insensible government in place, $600K can be used to fund huge infrastructure projects in the country to truly alleviate "materialistic" poverty. Swiss bank accounts are hardly opened by a middle class person in any "developing" nation. I don't even believe any ordinary person will go out of the way to deposit a few 1000 dollars in such banks. By having countries act like safe havens for rich tax evaders (or avoiders), these banks are severly violating the ethics of human behavior that would be so well expected from a nation that belongs to a World group that recommends how other countries should run their lives. It is time Swiss banks stop this so called secrecy pratice and actually promote a more open banking system that benefits the entire World in moving forward.
