PostFinance to close foreign youth accounts

PostFinance restricts its youth accounts to those resident in Switzerland Keystone

PostFinance is closing youth accounts from clients living abroad over fears it may have to hand over personal client data to foreign authorities to help crack down on tax dodgers.

The move by the Swiss Post’s financial services provider is a safety measure to cut the risks for the company and its clients, PostFinance spokesman Alex Josty told French-language public radio, RTS. Swiss banks are under pressure to refuse money from clients if they suspect that it has not been taxed.

For PostFinance it is particularly the so-called “gift accounts”, which are problematic, Josty said. They are usually opened by grandparent or godparents who want to pay in money for a child’s birthday or at Christmas. PostFinance fears that parents may “forget” them when they file their tax declarations, Josty said.

Some of the roughly 1,700 youth accounts hold “large” amounts of money, Josty said. The values suggest that it is more likely money, which is not being declared to tax authorities, rather than a child’s savings, RTS said.

Earlier this year, Switzerland signed the Foreign Account Tax Compliance Act (Fatca) with the United States, which obliges foreign firms to report offshore accounts by US taxpayers that amount to more than $50,000 (SFr47,000).

It has put financial institutions under pressure to tighten their rules to reduce their risk exposure.

According to the letter PostFinance sent to clients it no longer offers gift accounts to clients domiciled outside of Switzerland. It asks clients to supply an account to transfer the funds, or it will be forced to block the account, the letter reads. PostFinance’s website states that holders of gift accounts must be domiciled in Switzerland.