ALL YOU SHOULD KNOW ABOUT SWISS BANKS

The legendary ‘Swiss Bank Account’, almost synonymous with a good mystery novel or a blockbuster Hollywood production, is famed for its numbered accounts. Swiss Banking has long been erroneously associated with the wealthy and those of dubious repute.

The truth be told, Swiss Banking is not as shady as popular culture has made it out to be. In reality, Swiss Banking is well loved by people around the world. In fact, over 51% of the accounts held at Swiss Banks are offshore accounts, i.e. account holders are residents of other countries. Here are a few among many reasons for its international allure:

• The Swiss Banks’ remarkable stability through both economic and political unrest – The banks have historically, staunchly maintained their neutrality amidst turmoil in the surrounding nations. As early as the Sixteen and Seventeen hundreds, the Swiss realized the power of neutrality. Neutral stances imply that the Swiss banking standards would remain unchanged, making it a natural resort for the common man as well as the wealthy, in order to protect their assets however large or small. History has proven that times of war in surrounding nations have been times of prosperity for Switzerland owing to exponential increases in inflow of currency into their banks. Example: the Thirty years war (1618-1648), the Franco-Prussian War (1870-71) and the First World War (1914-18).

• Anonymous Accounts – Anonymity has quite successfully protected individuals from paying heavy taxes in their home countries thus making Switzerland a tax haven for hundreds of foreigners and offshore businesses alike. Anonymity has also exempted account holders from being held liable for their assets held in a Swiss Bank account, this implies that their assets remain secure despite financial crisis in their own countries. Example: Catholic kings of France did not want to be known to have transactions with Protestants, and thus enjoyed the privacy being offered. Many Germans have been known to deposit their savings and assets into Swiss accounts especially during Nazi rule for the sake of protection from seizure. Secrecy has been on the cards for Swiss Banks ever since the 1700’s when, the Great Council of Geneva, ruled against disclosure of clients’ details or their identity by bankers. The practice of secrecy is deeply rooted in the banking system, and dates back to times before Switzerland itself existed as a state. The most prominent and recent move by the government was in 1934, when the government made disclosure a criminal act, through the Banking Law of 1934.

• Currency freedom – Anyone holding a Swiss Bank account may withdraw money in a currency of their choice, regardless of their nationality. This makes the account apt for international trading purposes.

Swiss Banking: A closer look

Although some believe that the Swiss Banks’ numbered accounts are aids to hide illegal activities, the Anti-Money Laundering Act of Switzerland ensures that money being deposited into their accounts is legal. This is done by requiring that all deposits are made only with proof of the source of income.

Swiss Banks usually operate region-wise. Each bank is responsible for a particular location both locally as well as internationally. This way, the bank is able to keep abreast of the relevant news and is able to steer its way through changes in economic, political, legal and technological regulations. This manner of operation has also enabled Swiss Banks to effectively deal with countries that have sought to bring more transparency into Swiss Banking. Since only a branch gets involved each time, they are at liberty to delay, deny or otherwise respond to foreign demands for account holder information. Thus, the security of the banks’ clients is protected at all times.

However there are exceptions to this case. For example, if a government is able to provide evidence that a potential account holder is involved in illegal activities, the Swiss Banks are liable to disclose such account holders’ names and details. Furthermore those Swiss Banks that have branches in other nations, cannot guarantee anonymity, owing to the fact that the branch will be subject to the local rules and regulations in force. Thus a Swiss Bank branch located in America will be subject to American laws and offer no greater privacy than that of other American banks.

Opening Swiss bank accounts are also popular owing to the higher than normal returns on different types of deposits. Swiss Banks offer:

• Postal accounts – are entry level accounts possessing the basic and more commonly used features such as internet banking, international debit card through which any amount of cash may be withdrawn from an ATM at any country in the world, no limits on deposits and of course anonymity.
• Standard accounts – Minimum deposits are required along with yearly and monthly fees. This type of accounts is more suited to locals or those moving to Switzerland.
• Investment Funds – Typically preferred by those wanting to set aside some money for future use and build wealth over time. This account offers attractive returns, flexible pay in amounts, anytime withdrawals and not to mention low risk in investment due to diversified investing put together by the account holder through consultation with his guide/consultant.
• Numbered accounts – Offers a higher degree of anonymity than an account with the Name of the individual. However, every numbered account has to be associated with the account holders’ information which is known to a very few bankers.

A Swiss Bank account is certainly lucrative, however only time will tell just how long and how well the Swiss Bank can keep up its stability and offer the advantage of secrecy.