Banking Secrecy Essay

1923 WordsFeb 21, 20118 Pages
You may be familiar with the following terms: tax evasion, money laundering, and offshore bank accounts. These terms involve the ideal of bank secrecy. The true definition of bank secrecy is a legal principle in some jurisdictions under which banks are not allowed to provide authorities personal and account information about their customers unless certain conditions apply (Ziegler, 3). This affects the global population. It is a huge problem within the United States along with the entire world. In the following paragraphs the secret of this private banking will be revealed. Including how other countries are affected including Switzerland, Luxembourg, and the Caribbean. Banking secrecy was introduced in Switzerland in the 1930s with the stated aim of protecting the privacy of bank clients. Fines of up to 50,000 Swiss Francs and 6 months imprisonment punish violations (Ziegler, 9). Violators are prosecuted even if a plaintiff has filed no criminal lawsuit. Since the passing of anti-money laundering legislation in the early 1990s, banking secrecy can no longer be relied upon to shelter funds that originate from what would be considered a crime or a felony under Swiss law. Banks suspicious of having received such funds have the obligation to inform the authorities, and a criminal investigation is launched. However, since much of what qualifies, as tax evasion in other countries is not considered a crime or a felony under Swiss law, banks are not required to inform the authorities of the receipt of funds suspected to originate from tax evasion. This has made Switzerland quite attractive for such funds and appears to be a source of rents for Swiss banks. In recent years, Switzerland has come under considerable pressure from other countries to relax its banking secrecy. In particular, in 1998, the European Union put pressure on Switzerland to agree to exchange

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