Swiss Bank Secrets

Crime writers and Hollywood producers take note: Secret Swiss bank accounts aren’t so secret anymore. Switzerland’s reputation for tight-lipped discretion made it a magnet for money from dictators and tax dodgers, along with the fictional assassin Jason Bourne. Now whistleblowers and a crackdown after the 2008 financial crisis are creating a world less tolerant of offshore havens. That’s enabled the U.S. and other countries to break open the vault. Switzerland’s biggest banks have paid fines and fingered their clients. Customers are being told to pay their taxes or clear out their accounts. It's not clear whether Swiss banks will be able to hold on to their clients without the cloak of anonymity and how much more the industry will shrink. There are also questions about whether the cleanup will lead to less tax evasion, or just push it elsewhere.

Billions of dollars have oozed from Swiss banks as clients take part in government tax amnesty programs in Europe and the Americas. The end of secrecy, combined with other pressures such as negative interest rates, may trigger the disappearance of a third of Swiss banks. In early 2015, a whistleblower leaked account details from thousands of customers of HSBC’s Swiss unit, prompting calls for tax authorities to step up investigations. Over the last several years, the country's largest wealth managers have cut deals with the U.S. government and admitted they helped Americans cheat on their taxes. UBS agreed in 2009 to turn over account details on 4,700 clients after a banker caught in the act revealed the use of clandestine accounts, shell companies and other techniques to help rich people avoid detection. Credit Suisse pleaded guilty in a U.S. court in 2014 and paid $2.6 billion. More than 80 other Swiss banks settled to avoid prosecution. The banks want to avoid the fate of Wegelin, the country’s oldest lender, which was forced to close in 2013 after a guilty plea. A handful of U.S. inquiries are unresolved and authorities in France, Belgium, Germany and Argentina continue to probe. Individual bankers and taxpayers have also faced charges. Switzerland avoided an OECD blacklist in 2009 by agreeing to adopt international standards on exchange of information on foreign account holders. Those standards presaged the global system of automatic data transfer that will start in 2017.