Swiss banks are commonly seen as places where shady businessmen or corrupt politicians move their funds to avoid being caught. This is due to the associated anonymity with them, but in reality, for a long time now the banks have not allowed such suspicious activity. Laws have been set in place to combat this. So what else do Swiss bank accounts let you do?
Well from accepting all major currencies to having very low financial risk, Swiss banks have a whole host of benefits that could make anybody that is looking ahead into the future consider opening one. Here we’ll cover how to open a Swiss bank account, how it will benefit you, challenges you may face, and some alternatives if a Swiss bank account doesn’t quite fit in with what you need.
Myths about Swiss banks that you should know
There are several things that you should know about what Swiss bank accounts can’t quite do that the general media says. This is to save you the hassle of learning how to open a Swiss bank account if it doesn’t quite meet your needs. Though the increased amount of privacy is true, typically most of the normal information required for a transaction is still on display. In the select cases that it isn’t, it still comes with several other things to consider that we will get to later.
The main myth, of course, is that Swiss bank accounts can be used for criminal activity due to the associated anonymity with them. However, that is not the case as the banks require you to highlight a lot of the information related to the money you’re depositing. This is so that people looking to open Swiss bank accounts do not start indulging in suspicious activities.
Also, despite the bank’s efforts to keep their clients’ identities private, when pressured by foreign governments they typically comply with only some cases. The bank will not provide the client’s details if sufficient evidence of corruption or illegal activities is not demonstrated.
How to open a Swiss bank account in 3 simple steps
Step 1 in how to open a Swiss bank account: Things to consider before applying
For a non-resident opening an account, there are some basic things to consider, such as age restrictions. Applicants should be at least 18 years old.
Secondly, People need to realize that they will not be able to access some day-to-day services with the bank since almost all of your transactions will need to be through the post (some may be allowed through the internet).
There is as well the time and work involved in opening one, as it will take not only a long time to process but to make sure things go smoothly. You’d preferably be better off speaking with someone on how to open a Swiss bank account to get assistance before you start an account.
Step 2 in how to open a Swiss bank account: Consider what kind of bank you want
As you would expect, there are a couple of choices when it comes to where you can store your finances as there are of course many different banks in Switzerland. All of these banks allow you to make transactions, however, some have additional features. Let’s look at the different types of banks you can open your account with.
The Premier League: These banks are at the very top in Switzerland dominating the market and have a strong international presence. UBS, Credit Suisse, and Julius Bär are some of them.
Middle League: These are the banks that are well known in Switzerland but lack the same amount of international presence typically only having banks in Switzerland itself. They usually offer more of the traditional banking experience, specializing in their regions to make their customer experience the best for the locals. Banque Bonhôte & Cie SA, J. Safra Sarasin, Migros Bank, and Zurich Cantonal Bank are some of the middle league banks.
Boutique Banks: These are the kind of banks that are privately owned and typically only serve a rich clientele. Because of this, they offer more personal services like direct financial advice and ways to help directly grow your investments. These types of banks come with a huge minimum deposit requirement which can go up to millions of dollars, though a number of them take in initial deposits of $50,000. Mirabaud, Swissquote, and WIR Bank are some examples of boutique banks.
Step 3 in how to open a Swiss bank account: Requirements
Like any other bank around the world, there are basic things that they would require of you to ensure that the bank does not work with suspicious clientele, these include
- An authenticated copy of your passport
- Documents detailing how your financial conditions are (company documents, tax returns, etc)
- Proof of your current residence (they will send you emails both to confirm and to complete certain documents)
What makes Swiss bank accounts so alluring?
Now that we’ve covered how to open a Swiss bank account, and what initial obstacles you may encounter, we’ll go on with why these types of accounts can be so alluring to corporations and investors.
Anonymity
One of the main reasons why many would want to know how to open a Swiss bank account is the privacy associated with it but in reality, it is somewhat limited in what it covers. Depending on who you are, the benefits that come with this may vary. You can make the most out of it if you are wealthy and want to avoid things like flimsy lawsuits or being a target for criminal activity.
In cases where you might be part of some criminal activity unless there are clear signs of your involvement in the activity or if your crimes also go against Swiss law directly. If your situation doesn’t match this then the bankers aren’t allowed to disclose any private information. Although your name will still appear in any documentation made by the bank since anonymous bank accounts have also fizzled out over the years due to stringent regulations.
Many banks will provide the utmost amount of privacy such as hiding your name in more common transactions using numbers. With only a handful of individuals at the bank itself knowing the owner of the account, this of course comes with a much heftier maintenance fee than a normal account, and also comes with its own limitations.
On the off chance that you get involved in conducting criminal activities (money laundering, association with a criminal organization, theft, tax fraud, and blackmail) yourself, in most cases, your account will probably be handed over to your government and be frozen. There are a handful of cases where your information may be released and these include inheritance, divorce, bankruptcy, and other legal or civil matters.
Economic stability
For any individuals worried about their government messing up the economy one way or another, learning how to open a Swiss bank account would be very beneficial. As the Swiss economy is highly stable and considered to be one of the strongest economies in the world.
They also are relatively open to foreign capital since they allow FDIs or foreign direct investments. This is done to ensure stimulation of the economy and to achieve growth.
Political stability
It has been centuries since Switzerland has taken part in any conflict as they have been focusing their efforts on developing itself and making sure its people can live peaceful lives. Because they remain neutral it helps with both their economy making it a haven for people to store their money.
Creditor protection
Although creditor protection is not on the same level as seen in the media, with some help from a financial planner, you can take a few steps to keep your money safe from creditors without having to do anything illegal.
There are a handful of laws that can protect your offshore assets depending on the situation. But for any fraudulent activities, you won’t find much protection even with a Swiss bank account.
Inheritance tax
If you were to pass away, you don’t need to have any worries about where your money will go as it will be passed on to the person in your will without any additional fees.
The challenges you will face in offshore banking
There are other problems you may face that wasn’t covered in how to open a Swiss bank account. The reason for this is that these are more general issues with offshore banking in general, should a Swiss bank account not fit with what you’re looking for.
Opening new accounts
Though we did cover how to open a Swiss bank account when it comes to other countries or banks, they might have different standards. The biggest one is requiring to meet in person to open an account, and in some cases might require two IDs, one of which needs to be local.
Language barriers
Outside of Switzerland among the other tax havens, there are other popular banks around the world but some of them require that you work with them using the local language.
FACTA
If you live in the U.S. and have been looking up how to open a Swiss bank account, you’ve probably already seen this. What it’s referring to is the U.S. IRS Foreign Account Tax Compliance Act. Any banks that haven’t complied with FACTA, have a 30% withholding tax on any U.S. sourced income to foreign entities.
Though many popular banks around the world have gotten complied with FATCA, in your search, you might find a bank that you would prefer not to go through these regulations or compliance with. Hence, be careful of such banks even if they have multiple features as the risk of keeping money is considerably high.
Local banks handling foreign accounts differently
Depending on the bank, there might be more or fewer complications as a foreigner since you could be using a different currency to them. This is one of the reasons why you’d want to learn how to open a Swiss bank account instead. There are other issues such as possibly having to have a split payroll.
Rules being subject to change
This of course varies in frequency depending on the country or bank. In the cases where this does happen, it introduces possible setbacks in your plans. The most common problem that you might face is if you are faced with different interpretations of rules within the same company. To help alleviate this it would be a good idea to keep tabs on who you speak to or who is assigned to you for providing service. This is great as you can always approach the designated person to solve your concerns.
Alternatives to Swiss bank accounts
After learning how to open a Swiss bank account and the challenges, you might think to yourself that it’s not quite for you. Don’t worry as there are some other places considered to be tax havens that might interest you if Switzerland doesn’t quite cut it.
Panama
Panama has what is known as a territorial tax system. It taxes any income earned within it but exempts income earned overseas. This is done to encourage both foreigners to open bank accounts and for local businesses to branch out and bring money back. Panama is also relatively stable politically making it a great option to store your savings.
The British Virgin Islands
Due to its unique model for international businesses seeking to enhance their international financial services, this is another prime spot for offshore banking.
Belize
In Belize, the financial sector is a very strong contributor to their nation’s wealth. There are strict standards that the banks have to adhere to. One of their requirements is to maintain a minimum liquidity ratio of 24%, this makes investing in their banks and other businesses very lucrative. They also maintain an easy-to-use online banking system and provide a good amount of privacy protection.
Singapore
The financial sectors in Singapore offer some of the best financial managers in the world plus having a very strong connection with the rest of the world’s financial centers allowing you to work with lots of different financial experts. All that with a similar amount of economic stability provided by Switzerland.
The Cayman Islands
Besides having a strong reputation as a tax haven, they have tried to capitalize on making it so that the absolute minimum of taxes can be taken from your account. This allowed them to carve a niche in the market due to paying the minimum amount in taxes while also maintaining a fair amount of privacy for their users.
