MercoPress. South Atlantic News Agency

Switzerland asks banking system s to prevent un-taxed assets in their accounts

Without violating client confidentiality, no illicit money in Switzerland, please

Switzerland has asked its banks to tighten due diligence process to prevent un-taxed assets in their accounts without violating client confidentiality. The measures come on the back of growing international pressure on Swiss authorities to act against any possible hoarding of illicit and untaxed money in Switzerland-based banks.

“The focus is on enhanced due diligence requirements for banks when accepting assets as well as a requirement for foreign clients to make a declaration on the fulfillment of their tax obligations“ Swiss Federal Council, the country's top policy-making authority has said. The new measures are expected to come in force by September this year.

Swiss banks are known to have the strongest secrecy clauses globally, which have helped them attract the rich and mighty clients from across the world, but has also given them a 'tax haven' tag.

Swiss government, however, opposed the idea of 'automatic information exchange' with any other country, asserting the 'bank client confidentiality' should be respected as far as possible.

”The Federal Council's aim is to create favorable framework conditions for the Swiss financial centre that boost its competitiveness and at the same time are accepted worldwide. Abuses of bank client confidentiality should be prevented insofar as possible,“ it said in a statement.

It has also proposed international withholding tax agreements for taxing the clients as per the regulations of their home country, while safeguarding their privacy.

”Despite the fact that some issues have not yet been fully resolved, there is international interest in this approach and it will be pursued by Federal Council beyond the agreements already negotiated with Germany and the UK,” it said.

Swiss banks levy a withholding tax of 26% on income earned on assets belonging to German customers, roughly equivalent to the current rate of tax charged on such income in Germany.