Secret Swiss bank accounts are infamous in the public eye, largely thanks to James Bond movies, and for getting a number of the world’s biggest lenders into hot water. UBS finally confirmed that it is under investigation by the US authorities, again, for helping rich Americans to evade taxes. It already stumped up £512 million in 2009 to settle a tax evasion probe. Meanwhile, HSBC is suffering from a serious financial data dump by whistleblower Herve Falciani, which resulted in the leakage of thousands of clients bank account details andmillions of pounds recuperated in tax. So how does the Swiss banking system work? How to get a bank account Setting up a secret Swiss and Luxembourg based bank account isn’t as tricky as you may think. As with all bank accounts, you fill in forms and provide identification. However, as one former private banker detailed, the level of scrutiny over identification over the last decade and significantly changed. "In the late '90s it took only a couple of sheets of A4 to register a new account,"Jay Vaananen, who anonymouslywrote about the secretive world of private banking for years, told Business Insider UK. "By 2005-2007, the amount of paperwork increased to around 10 sheets but by today's standards, you need to go through around 100 pages." Due to the level of secrecy around the Swiss and Luxembourg banking industry, the scrutiny over identification is a lot tougher than it used to be. If you notice, the UBS and HSBC data and subsequent investigations all centre on the pre-credit crisis period and mainly in the early 2000s. "I believe when HSBC says things are different now, because the industry has massively changed since 20 years ago. The attitude has dramatically changed from that time toward banks and tax accountancy. Banks are scared sick of inadvertently falling foul of regulators." What does a 'secret' bank account get you? Unlike regular bank accounts, Swiss ones use numbers and not names. Under law, bankers do not have disclose the existence of an account, who it belongs to, or any other information, without your explicit permission or in very special circumstances. Effectively, if you are seriously wealthy individual, likemusic legend David Bowie or fashion designer Diane Von Fürstenberg, you are able to hide the amount you have funnelled away from the authorities. Whether you have £1 or £1 million in your bank account, no one will be given that information without you authorising this first. This secrecy extends to the banks' own directors. "People forget that in Switzerland and Luxembourg, where I previously worked, the secrecy laws around banking are so strict that even other units within the same lender would not be privy to the information under the Swiss or Lux unit," says Vaananen. "Even if you sat on the board of directors at the parent group, unless you sat on the board of directors of the Swiss or Lux unit, you would not have information relating to the activities or clients at that bank. You'd only have overall profit figures and so forth." While Stephen Green, the CEO of HSBC bank group from 2006 and 2010, has not commented on the Swiss bank account data leak, the UK government is calling for him to give evidence. Considering he was alsochairman of HSBC Private Banking Holdings (Suisse) though, he could face a tough grilling. What do private bankers do for you? Private bankers are there to invest your money and seek out the more effective way in reaping in high returns for the wealthy. They don't sort out your tax returns, that's what accountants are for. "The job of the private wealth banker is, of course, to invest clients money and deliver as favourable returns as possible. Banks did not care whether its client was declaring tax in its home country, that was the responsibility of the client's accountant. The clients tax status was irrelevant outside Switzerland," says Vaananen. "This is not to say that banks were not aware of clients' tax issues. From the Birkenfield leaked information, there were times when UBS bankers had allegedly smuggled diamonds intoothpaste tubes to avoid the IRS." Why everyone follows the US regulators' lead The HSBC scandal has landed on a variety of European government's doorsteps but, usually, they follow the US' lead in investigating and prosecuting firms and individuals. The tax rules across different countries are horrendously complex. However, theUS Bank Secrecy Act of 1970and theUSA Patriot Act actively helps the country to break down the walls in order to penalise serial tax evaders. "Putting the moral element aside, you have to remember that leaking the private Swiss bank account informationin the manner that Herve Falciani did was a criminal act. This can make it difficult, from a legal standpoint, to use in evidence is various jurisdictions," says Vaananen. "The US has become the stepping stone for for European regulators to launch investigations into several banks. Only the US has the real muscle and success is striking deals with the banks over a variety of financial scandals, especially tax evasion and avoidance." Belgium is mulling over whether to issue arrest warrantsfor directors for the Swiss division of the bank. France said it would like to see a coordinated European effort when it launches its investigation into the lender. In the UK, the latest comment from Britain's taxman shows how domestic regulators sometimes are seen to be 'asleep at the wheel.' "We received the data under an international treaty agreement with France, which had tight restrictions. We couldn't move it outside the department; we could only use it for tax evasion purposes," said an HMRC spokesperson when the BBC asked about why it did not notify the Financial Conduct Authority of the HSBC investigation.
How it works? You get a number and can start going about your unethical business practices. Nobody outside Switzerland or not doing business in Switzerland or with Swiss corporations should even have a need for a Swiss bank account, unless he/she is indifferent about moral and ethical values. A corporation or individual who seeks "tax optimization" shelters and schemes may in certain jurisdictions and under certain law codes act legally but certainly not ethically. For example, an American company does "uses" (aka abuses) in any way tax loop holes, anything that optimizes their tax payables in other jurisdictions may do so legally but I would not classify it moral and ethical. The company enjoys all the benefits that come along with being headquartered in the US but it also comes with the responsibility to pay US corporate taxes. They enjoy the American infrastructure (roads, access to air transport, rail, internet, telecommunications), legal enforceability of contract law in American law courts, and overall general freedom and insulation from outside threats, such as terrorist attacks, that may be a daily exposure in, for example, Egypt. All those government privileges cost money and are not paid for other than via taxes. How a company can pretend to act ethically and morally right but trying everything to abuse the law to let others pay relatively more while itself paying less and less is beyond my comprehension. Of course greed is the central pillar of capitalism, I get that. And that such corporation does not classify itself as cheat I also understand. But that we as bystanders just stay silent and basically shake hands and pretend as if it is laudable to manipulate and abuse the system is something I do not understand. But hey, like in finance there are 1-5% true producers and 95-99% are like parasites that feed off their host. Whole legions of tax and legal "professionals" (aka individuals who bend the law to the most extreme possible) feed off such corporations. Nobody wants to cut off their own hand. Funny world we live in.
as long as you declare the income (probably zero) of your swiss bank acct, it's perfectly legal to have a swiss bank acct (for us Brits anyway). I was considering one last year, but couldnt see any point.
LOL! there is only one problem--- you generally need a minimum deposit of $1 million USD and What's the minimum deposit? Use to be $10 million for a numbered account----I think
UK set up tax break rules to encourage Yanks to put there money into UK banks, seriously, it's where the money goes these days well for Yanks.
Lol, you can open one with $1000. We are talking about a Swiss bank account, right? Not talking about an account at Goldman, Sachs or something?
The numbered swiss accounts with no name associated-- just a number. Not sure if they even exist any longer.
For those it was a $100k, that was a few years ago though - i know all this stuff cause a former gf was a swiss private banker