I presume they do pay interest on saving accounts (unless it's "Islamic finance"). It's not like Swiss law forbids it. How high this interest is in the current environment is a different question.
I think the OP may be referring to the fact that rates in Switzerland at the moment are so low (3M CHF LIBOR is at 0.17%), you get no interest paid on your deposits.
My guess is that they pay somewhere in the vicinity of Euribor (which, for 3M, is 1.051%). It doesn't really matter, 'cause the current rate differential isn't enough to compensate you for holding EUR rather than Sfr. Huh? Like everywhere and forever?
How do you know Swiss Banks report all the money? Why should we trust to entities refusing to disclose their customers?