Swiss Banking Act of 1934
Bank secrecy
was invented by the 1934 Swiss Banking Act following a public scandal in
France, when MP Fabien Alberty denounced tax evasion by eminent French
personalities, including politicians, judges, industrialists, church
dignitaries and directors of newspapers, who were hiding their money in
Switzerland. He called these men of "a particularly ticklish patriotism",
who "probably are unaware that the money they deposit abroad is lent by
Switzerland to Germany". The Peugeot brothers and François Coty, of the
famous perfume family, were on his list. Since then, Swiss banks have
acquired worldwide celebrity due to their numbered bank accounts, which
critics such as ATTAC NGO alleged only help legalized tax evasion, money
laundering and more generally the underground economy.
Reasons to use bank secrecy
There are a number of reasons
to use banking privacy:
- Protection from
litigation.
- Protection from
criminals. In some countries, criminal gangs can access information on
bank customers. This might interest criminals, such as kidnappers,
extortionists, or identity thieves.
- Protection from
solicitation. This might include charities, venture capitalists seeking
seed money, family members, beggars, or investment salesmen.
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What is Swiss Bank Secrecy?
Bank secrecy (or bank
privacy) is a legal principle in some jurisdictions under which
banks are not allowed to provide to authorities personal and
account information about their customers unless certain
conditions apply (for example, a criminal complaint has been
filed[1]). In some cases, additional barriers to disclosure are
provided through the use of numbered bank accounts or otherwise.
Bank secrecy is prevalent in certain countries, such as
Switzerland, offshore banks and other tax havens under voluntary
or statutory privacy provisions.
Created by the Swiss Banking Act of 1934, which led to the
famous Swiss bank, the principle of bank secrecy is sometimes
considered one of the main aspects of private banking. It has
also been accused by NGOs and governments of being one of the
main instruments of underground economy and organized crime, in
particular following the Class action suit against the Vatican
Bank in the 1990s, the Clearstream scandal and September 11,
2001.
Advances in financial cryptography (e.g. public-key
cryptography) could make it possible to use anonymous electronic
money and anonymous digital bearer certificates to achieve
financial privacy and anonymous internet banking, given enabling
institutions (e.g. issuers of such certificates and digital
cash) and computer systems that are secure against attackers.
Under the
principle of bank secrecy, privacy is statutorily enforced, with
Swiss law strictly limiting any information shared with third
parties, including tax authorities, foreign governments or even
Swiss authorities, except when requested by a Swiss judge's
subpoena[citation needed]. However anonymous banking is not
strictly true as a term as all Swiss bank accounts, including
numbered bank accounts, are linked to an identified individual
under Swiss banking law. This law only permits a bank to share
information with others in cases of severe criminal acts, such
as identifying a terrorist's bank account[citation needed]. Any
bank employee violating a client's privacy is punished quite
severely by law. Many offshore banks, located in tax havens such
as in the Cayman Islands and Panama, also have strict privacy
laws.
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More Reasons to use bank secrecy
- To hide it from friends, spouse or other family members.
- To hide it from the employer. (Many employers restrict the ability of their staff to trade shares to prevent conflicts of interest).
- To store embezzled money.
- To launder money.
- To prevent confiscation of money, e.g. in the case of potential bankruptcy.
- Tax evasion (banking secrecy extends to tax agencies being refused permission to examine accounts).
- Tax resistance (by libertarians, or others, who oppose the institution collecting the tax).
- Privacy from press or publicity. Many newspapers annually publish "rich lists", which are lists of the richest people in a country or an area. Many factors including the size of an individual's bank balance can be taken into account in drawing conclusions as to the size of his wealth.
- Protection from over-bearing or corrupt local government agencies.
- Simply for privacy. The possession of liquid wealth attracts publicity, which is not always welcome.
- For any other reason which requires no-one being able to identify the amount of money you have or have earned/acquired.
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