Swiss gov’t proposes first serious change to banking secrecy

Proposal would allow bank account numbers, balances, capital transactions to be shared in anti-terrorism, money laundering cases

Seeking the full story on money laundering: new Swiss banking secrecy rules may lie ahead

BERN, SWITZERLAND – Swiss banking secrecy could be in for its first serious change, in addition to the pending double taxation treaty with the US.

Wednesday 18 January the Federal Council put out for consultation an amendment to the Money Laundering Law that would allow Swiss authorities to share, with certain foreign government agencies, bank account numbers, information on capital transactions and bank account balances. The information could be supplied if requested as part of money laundering and anti-terrorism investigations.

Today’s proposed legislative changes will now be sent out for consultation until the end of April, at which point the pre-project proposal will be adapted in line with remarks submitted, before it goes through further legislative hoops.

The Swiss-US treaty, which has  not yet been approved by parliament, would allow the US to ask for bank data without  first providing a name and account number, in a very limited number of cases. It has been reported by US media as a breach in the wall of Swiss banking secrecy, but in Switzerland it is negatively viewed by some politicians as simply a concession to one large nation.

The new proposal would have a far broader impact, affecting working relations with financial investigators in 126 other countries. Support for money laundering laws has, in contrast, been stronger in Switzerland, with the government pushing in recent years to uncover illegal assets of political leaders from elsewhere. As a result, “Switzerland has returned about CHF 1.7 billion to their countries of origin, which is more than any other financial center of a comparable size”, Bern notes, but exchanges with other governments have been hampered by Swiss banking secrecy laws.

Swiss agency will also be allowed to request more information

The changes would also work in the other direction, giving MROS (Money Laundering Reporting Office Switzerland), the agency through which such requests are made, the power to obtain more information from its counterparts abroad than it can today, given the constraints of Swiss banking secrecy laws.

In future MROS would also be able to demand financial details from third parties that have not themselves announced suspect financial activity, not possible today because of banking secrecy constraints. The government argues, in a statement on the proposed changes, that such occasional requests would improve the quality of the information Switzerland can supply other governments as well as information on suspect cases generated here.

The news was announced in the context of efforts by the federal government to reinforce efforts to fight money laundering and to strengthen the Swiss financial industry. Swiss bankers have been under pressure from other governments, in particular to provide information to tax authorities.

Credit Suissse and 10 other banks are currently under investigation by the US Department of Justice on suspicion of helping wealthy Americans avoid taxes.

The proposal is the result of MROS being the only agency among the Egmont group of Financial Intelligence Units (FIUs) from 127 countries that does not share financial information. The Egmont group in July 2011 decided that MROS’s refusal to share information, on the grounds it contravened Swiss law, runs against the group;s principles, and it threatened to suspend Switzerland unless it showed, within a year, that it is undertaking the steps necessary to change the law.