Why India and some Indians should be worried about the rapid change in Swiss banking laws

Voices Thursday, June 05, 2014 - 05:30
By Chitra Subramaniam Bangalore-Geneva February 24 - International pressure and empty coffers across Europe is pushing Switzerland to take an early call on what it proposes to do about automatically sharing blank client data with foreign tax authorities, Swiss Finance Minister Eveline Widmer-Schlumpf said recently.“We certainly can’t say that we’re now going to wait until everyone has introduced automatic information exchange – that would be a wrong path to take,” the Minister told the Neue Zuercher Zeitung (NZZ), a major Swiss daily. Calls for Swiss banks to part with data have increased in recent years as countries across the world seek to retrieve stolen and undeclared money which they want ploughed back into their morose economies. To date, 42 countries have declared an interest in sharing information on taxpayers’ offshore bank and brokerage accounts based on a benchmark drafted by the Organisation for Economic Cooperation and Development (OECD). The Swiss had said earlier that they would wait for the guidelines to become the international norm before taking any decisions. While some saw this as part of a strategy to alert account-holders, others argued that without process, the exercise would amount to nothing more than a hit- and-run exercise. Switzerland accounts for CHF 2.650 trillion or 27% of assets under management. The United Kingdom (UK) accounts for 25%, Luxembourg 6%, the Caribbean Islands for 13%, Singapore and Hong Kong 13%, the United States (US) for 8% and others bring up a total of 8%. Switzerland (population 7 million) sticks out like a sore-thumb fuelling calls for more transparency. That ship has now set sail requiring the gnomes of Geneva, Zurich and Bern to move swiftly and in tandem with regard to automatic information exchange. The term “gnome” is a name given to Swiss bankers by other Europeans implying quiet men with deep pockets going about swiftly and silently as they work their way through international money markets, politics and bureaucracies. A member of the Swiss financial community contacted by TNM said Swiss banks are prepared for the automatic exchange of information, but several questions remained. “We don’t know how the trusts based in the UK and going to work with these new rules – and what about Dubai, Panama and Hong Kong? Will they apply the rules and when will that be,” he asked. Swiss newspapers and commentators, while welcoming the calls for transparency in their banking systems, have also questioned the hypocrisy of the UK government calling for transparency and accountability in Swiss banks while remaining silent about their tax havens, namely the British Virgin Islands (BVI). Under the OECD’s road map, banks will now have to report residents’ account balances to their government which would then make that information available automatically to any other government that had signed the agreement. “Who would have thought a year ago that today we would have the parameters of an OECD standard? Everything has happened a lot faster than we thought it would. That means we have to position ourselves quickly, and in relation to the European Union, as well,” the Minister added. Once there is an agreement on the standards, the conditions of Switzerland’s cooperation with particular automatic information exchange signatories can be submitted to parliament in 2015, Widmer-Schlumpf said. The United States and Germany have been leading calls for Switzerland to automatically transfer information about their respective citizens who have undeclared money in the alpine country. The US government has all but disabled Swiss banking laws, systematically going after Americans with Swiss bank accounts. Fearing a class-action suit from across the Atlantic , many private Swiss banks last year changed their status to limit individual liability of individuals who own private banks. Declaring interest in sharing information and signing double-taxation treaties is not why countries recover their monies from Switzerland. Political will or lack of it is all that matters. Indians know that better than most countries. A few months ago a young Swiss banker was enquiring what lakh-crore dollars meant. She knew millions and trillions, but was confused about lakh-crore dollars. Language corrupts. While India and Indians have been part of the chorus for several years – the Swiss are corrupt, we are so honest, they stash money, we don’t, the Swiss are not giving us any names, we have signed all treaties and many agreements, what to do – the show has moved on. Million euro-rupaiah. Compris?
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