Government clings to banking secrecy in face of mounting pressure

Kaspar Villiger says Switzerland will not give up its banking secrecy laws Keystone

The government has reiterated its commitment to a policy of banking secrecy, despite growing international criticism. The finance minister, Kaspar Villiger, said Switzerland was doing all it could not to encourage financial crime through confidentiality.

“There’s no chance of Switzerland being forced to abandon this principle, at least as long as we’re cooperating in an efficient way to solve the real problems,” Villiger told swissinfo.

Speaking to journalists in Geneva, Villiger expressed his anger at the clichéd view of Switzerland as a money-laundering paradise and repeated that banking secrecy was not negotiable.

“The confidentiality of banking should never be an instrument for abuse, tax fraud or criminal activities,” he said. “Today, we have all the instruments for fighting money-laundering and tax evasion.”

He added that the withholding tax system, which has been in place in Switzerland for the past 50 years, was much more efficient than any other.

Most forms of capital income are subject to this tax at a very high rate of 35 per cent. Villiger pointed out that even the new United States model is based on a withholding tax principle.

The most vocal criticism of Swiss banking secrecy in recent months has come from the European Union, which wants access to information on EU citizens with Swiss bank accounts who are suspected of tax fraud.

Some analysts have suggested that membership of the EU, which is the government’s long-term aim, will be impossible unless the fortress of banking secrecy is breached.

But Villiger said the EU itself decided to give its member states the opportunity to choose an information system or one based on a withholding tax.

“The Europeans cannot say we are wrong when they allow the same system for their own union. In 10 years, I’m sure they will see that it is an efficient system.”

He added that many other European countries wanted to follow the Swiss example.

Recent surveys have suggested that cracks may be appearing in Swiss public opinion, which has long been steadfastly behind banking secrecy.

A survey in September showed that 60 per cent of Swiss wanted banking secrecy abolished in cases of tax fraud, and 80 per cent wanted Switzerland to cooperate with other countries investigating tax evasion.

But Villiger is convinced that the Swiss are too closely attached to the notion of confidentiality to give up their cherished banking secrecy. “A person’s confidentiality is a very important principle, especially at a time when new technology allows you to draw up detailed profiles of everyone. Every person has a right to be protected.”

“We have all the tools necessary to avoid abuses, and that is why it is legitimate to maintain this special professional secrecy. I’m convinced that even if the government proposed moving away from this system, the people would never say yes,” Villiger said.

by Roy Probert