Time runs out for numbered bank account

Gone are the days of hiding behind a numbered account Keystone

The legendary numbered Swiss bank account is now a shadow of its former self following the introduction of a new money-laundering ordinance on July 1.

The regulation forces Swiss banks to reveal the names of customers who transfer money abroad.

Though the numbered account has not disappeared entirely, clients are no longer able to conceal their identity behind an anonymous set of digits when making transactions.

The regulation was introduced in 2003 but Swiss financial institutions were only legally obliged to comply with it after the one-year transition period came to an end on June 30.

International criticism

As the deadline for compliance approached, Germany’s finance minister Hans Eichel took the opportunity to attack the current business practices of Swiss financial institutions.

“I am very concerned that money transfers from Swiss banks to German financial institutions are being made without including the name of the sender,” he said in a recent interview with Swiss business newspaper “Cash”.

“Fundamentally [Switzerland] is falling short of international standards in the fight against money laundering… and [the practice] goes against current Organisation for Economic Cooperation and Development standards.”

The Swiss Bankers Association (SBA) rejects Eichel’s accusation that Switzerland is not doing enough to clean up the flow of dirty money.

“It is internationally recognised that Switzerland has the toughest rules in the world to fight money laundering,” said SBA spokesman Thomas Sutter.

Flow of money

But Geneva-based banking lawyer Carlo Lombardini questions the effectiveness of the new ordinance.

He does not believe a regulation forcing remitters to reveal their identities will have any impact on the fight against money laundering.

“It is completely useless, but unfortunately Switzerland had no choice because it had to introduce this provision based on international pressure,” Lombardini told swissinfo.

“Real criminals do not launder their money through banks… no money launderer is going to be stupid enough to make a transfer of funds in his own name along the lines of ‘please make this transfer in the name of [Colombian drug trafficker] Pablo Escobar’.”

Under pressure

The Swiss government has of late come under increasing external pressure to give up – or at least water down – its cherished policy of banking secrecy.

The origins of the latest ordinance can be traced back to a set of directives issued by the Financial Action Task Force (FATF) – a Paris-based organisation responsible for coordinating global efforts to crack down on money laundering.

A special FATF recommendation on terrorist financing calls on countries to force banks to include “accurate and meaningful information on money transfers”.

The FATF also urges that measures should be put in place to “ensure that financial institutions conduct enhanced scrutiny of transfers which do not contain name, address and account number”.

Lombardini argues that the new Swiss ordinance is an example of how the country has “boxed itself into a corner”.

“This was not a Swiss issue… it came from work made within international organisations fighting against money laundering.”

Tracing origins

Tracing the source of money transfers may have become easier since July 1, but historians continue to argue over the historical origins of the numbered account itself.

Swiss financial historian Marc Perrenoud speculates that such accounts date back at least a century.

“By the 1940s the numbered account had already established itself as one of the essential elements for the prosperity of Swiss banks,” he said.

Swiss banks continue to this day to defend the concept of banking secrecy amid fears that wealthy customers will desert the country if client confidentiality can no longer be guaranteed.

But Lombardini rejects the suggestion that new regulations will automatically lead to a flow of money from Switzerland.

“I don’t think there will be any significant impact… because there are always ways around the rules,” he said.

Perrenoud does not subscribe to the theory that any erosion of the significance of the numbered account spells the beginning of the end for Switzerland’s banking industry.

“The computer age has allowed Swiss banks to develop new methods of running their businesses which of course did not exist [when numbered accounts began] at the turn of the century.

“So I believe they will continue to prosper in the future.”

swissinfo, Ramsey Zarifeh

Key facts

The new money-laundering ordinance was introduced in July 2003 but was subject to a one-year transition period which ended on June 30.
The regulation is designed to crack down on money laundering and financial terrorism.
Under the terms of the ordinance, Swiss bank customers are no longer allowed to transfer money abroad without revealing their identities.