Home » Account Closed! — The Final Days of Secret Swiss Banking

Account Closed! — The Final Days of Secret Swiss Banking

by Louis J. Wasser

“If only God would give me some clear sign! Like making a large deposit in my name at a Swiss bank.”  Woody Allen

Ah, to be the billionaire owner of a privately-held company with plenty of money to hide! Just imagine. You wire money to a Swiss bank account number with no name. When you do make an appearance for the occasional withdrawal, the only things your banker can say are “thank you” and “large bills or bearer bonds?” Your account is secret and sacrosanct.

While for many years this was standard operating procedure for very wealthy, and very private, people around the world, they found themselves in not-so good company with tax fraudsters, financial cowboys, mobsters, the Enron Corporation, the Nazi Party, and drug dealers looking to launder money.

A federal judge in Alexandria, Virginia yesterday put another nail in the coffin of the Swiss tax haven, when Credit Suisse pled guilty to conspiring to aid tax evasion. The prestigious financial institution agreed to pay $2.6 billion in fines, most of which is earmarked for the US Department of Justice. According to Attorney General Eric Holder, Credit Suisse is the largest financial institution to take a guilty plea in 20 years.

To avoid prosecution, UBS paid $780 million, and turned over account details of 4,500 American citizens.

The United States and Swiss governments have been negotiating for a number of years now to encourage Swiss banks to disclose details of bank accounts held by US citizens, in return for the governments’ agreement not to prosecute cooperating banks. The agreement is broad in its reach, since the banks are required to reveal names of lawyers, accountants, fiduciaries, and all asset managers connected with these accounts.

The public relations fallout from the scandal has come down hard on the Swiss. It’s only been two years since a former Union Bank of Switzerland (UBS) banker was sentenced to two-and-a-half years in prison for conspiring with a wealthy developer to evade US income taxes. But he made out like a bandit when, afterwards, he disclosed to the IRS UBS’s entire system of tax evasion, and made himself a cool $104 million whistleblower’s reward.

To avoid prosecution, UBS paid the US government $780 million, and turned over account details of 4,500 American citizens.

The Swiss banking community has been under fire in other quarters for a number of years. In 1997 a bank security guard, Christopher Meili, told the US Senate Banking Committee that the bank he worked for had destroyed records verifying the assets it held of Jews who died in Nazi concentration camps. The disclosure has led to deal offers from the Swiss to try to fend off lawsuits.

It seems certain that the United States and Europe will continue to negotiate with Swiss banks — or to file lawsuits against them. For those looking for an offshore safe haven for their money, clearly the fabled Swiss bank account is no longer secret, or safe.

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