Swiss banks have earned a reputation around the world for providing sophisticated and discreet banking services. There are more than 400 banks in Switzerland. Banks are licensed by the Swiss Federal Government through its Banking Commission, and may operate throughout the country. A number also have offices or other representation in foreign countries.
Are Swiss Banks Safe?
Swiss private banks have a huge reputation for money and asset management. There is a government insurance for small bank deposits. The banking industry is very important to the Swiss economy and any type of financial crisis in the banking sector would receive the full attention of both the Swiss bank industry and the government of Switzerland.
What services do Swiss Banks provide?
Some banks specialize in only a few banking services, whereas others provide a wide range. As in most of continental Europe, individuals usually buy and sell stocks and bonds through their banks. The Swiss banks collectively have a long reputation for managing investment portfolios for their clients, and providing other services such as estate planning, wealth management, trust companies, etc., for individual customers.
What is Private Banking?
Private banks are those which are not incorporated, and hence the entirety of their partners' assets are available to meet the liabilities of the bank. These banks have a very long tradition in Switzerland, dating back to at least the revocation of the Edict of Nantes (1685). They are primarily associated with portfolio management for private clients. Most have become incorporated companies, so the term is rarely strictly true anymore. The term "private banking" is used more loosely to encompass all the banking services provided to clients in the area of portfolio and other wealth management services. These services are directed primarily at "high net-worth individuals", and there are a number of "private banks" which refuse any account of less than $ 1 million (or equivalent).
Swiss Bank Secrecy
Banks in most countries are prohibited from divulging information about their clients, and the provisions of the Swiss law follow the same lines. Swiss law is especially strict on any breech of confidentiality, whether in banking or in other commerce. The banking act adds a special section (introduced in 1934, in order to protect accounts of Germans, especially German Jews, from Nazi confiscation) which makes it a criminal offense, with the possibility of an individual going to jail, for the bank or its employee or agent to improperly divulge any confidential information. These portions of the banking law have been interpreted, both in practice and by the courts, to make it a serious offense to divulge any information about a bank customer to any third party, including official requests of foreign governments, unless very specific criteria have been met. Swiss bank secrecy is reinforced by a constant awareness of the seriousness of the bank's obligation to maintain confidentiality, starting with bank employees having to sign the secrecy portion of the banking act as a condition of employment. Both individuals and the banks are prosecuted if a lapse is discovered; this keeps awareness of bank secrecy high and and lapses rare. While this culture of absolute discrection is integral to the Swiss banks, the branch offices outside of Switzerland must operate according to the laws of countries in which they are located, which may not provide so much protection.
There are several measures in place to counter money laundering. The Money Laundering Act sets forth requirements of account holders' identification, and requires reporting of any suspicious transactions to the Money Laundering Reporting Office.
Matters such as Inheritance, divorce, and civil tax present problems regarding banking secrecy, these are civil not criminal matters. Political discussion is under-way concerning how to deal with tax matters which foreign governments consider a crime but Switzerland considers a civil offence.
Numbered Accounts
Numbered accounts (or pseudonym accounts) are not very different from normal bank accounts. The usual account records omit reference to the customer's name or other identifying information, replacing it with a code number or the pseudonym. The relationship between the code number or pseudonym and the actual customer is known only to a few senior managers and their secretaries within the bank. It is important to emphasize that a Swiss bank has an obligation to know the true identity of both the account holder and its beneficial owner, and that there is no such thing as an anonymous account. Because of the constant awareness and strict enforcement of bank secrecy, there is actually little need for numbered accounts, and it should be noted that they incur additional overheads for the bank (it is more difficult to validate transactions to and from such accounts). For all these reasons, the stories one reads about anonymous, numbered accounts are fiction.
Opening a Swiss Bank Account
If you would like to open a Swiss Bank Account, first find out what type of account you need. A Private Swiss Bank Account is for HNWI's (High Net Worth Individuals) and offers a prestigious service. Regular Swiss Bank Accounts can be expensive to maintain.
Swiss laws designed to prevent money-laundering are very strict. The Swiss bank is required to know its client sufficiently well to ensure that the funds being placed on deposit are unlikely to be coming from illegal activities. Opening an account on behalf of someone else is very tightly regulated, and those allowed to open such accounts must meet the same requirements as banks with respect to knowing the client. While each bank may set its own internal policies to ensure compliance with the money-laundering legislation, most banks require a personal interview before opening an account. The standard policy is therefore to interview the client at the bank's offices in Switzerland, make copies of identity documents (passport) and any other relevant information, and discuss how the account will be used and the source of funds. Ony after evaluating this information will the bank decide whether to accept someone as a client. We advise extreme caution before becoming involved with a Swiss bank without going through these formalities.
Are Swiss Banks Safe?
Swiss private banks have a huge reputation for money and asset management. There is a government insurance for small bank deposits. The banking industry is very important to the Swiss economy and any type of financial crisis in the banking sector would receive the full attention of both the Swiss bank industry and the government of Switzerland.
What services do Swiss Banks provide?
Some banks specialize in only a few banking services, whereas others provide a wide range. As in most of continental Europe, individuals usually buy and sell stocks and bonds through their banks. The Swiss banks collectively have a long reputation for managing investment portfolios for their clients, and providing other services such as estate planning, wealth management, trust companies, etc., for individual customers.
What is Private Banking?
Private banks are those which are not incorporated, and hence the entirety of their partners' assets are available to meet the liabilities of the bank. These banks have a very long tradition in Switzerland, dating back to at least the revocation of the Edict of Nantes (1685). They are primarily associated with portfolio management for private clients. Most have become incorporated companies, so the term is rarely strictly true anymore. The term "private banking" is used more loosely to encompass all the banking services provided to clients in the area of portfolio and other wealth management services. These services are directed primarily at "high net-worth individuals", and there are a number of "private banks" which refuse any account of less than $ 1 million (or equivalent).
Swiss Bank Secrecy
Banks in most countries are prohibited from divulging information about their clients, and the provisions of the Swiss law follow the same lines. Swiss law is especially strict on any breech of confidentiality, whether in banking or in other commerce. The banking act adds a special section (introduced in 1934, in order to protect accounts of Germans, especially German Jews, from Nazi confiscation) which makes it a criminal offense, with the possibility of an individual going to jail, for the bank or its employee or agent to improperly divulge any confidential information. These portions of the banking law have been interpreted, both in practice and by the courts, to make it a serious offense to divulge any information about a bank customer to any third party, including official requests of foreign governments, unless very specific criteria have been met. Swiss bank secrecy is reinforced by a constant awareness of the seriousness of the bank's obligation to maintain confidentiality, starting with bank employees having to sign the secrecy portion of the banking act as a condition of employment. Both individuals and the banks are prosecuted if a lapse is discovered; this keeps awareness of bank secrecy high and and lapses rare. While this culture of absolute discrection is integral to the Swiss banks, the branch offices outside of Switzerland must operate according to the laws of countries in which they are located, which may not provide so much protection.
There are several measures in place to counter money laundering. The Money Laundering Act sets forth requirements of account holders' identification, and requires reporting of any suspicious transactions to the Money Laundering Reporting Office.
Matters such as Inheritance, divorce, and civil tax present problems regarding banking secrecy, these are civil not criminal matters. Political discussion is under-way concerning how to deal with tax matters which foreign governments consider a crime but Switzerland considers a civil offence.
Numbered Accounts
Numbered accounts (or pseudonym accounts) are not very different from normal bank accounts. The usual account records omit reference to the customer's name or other identifying information, replacing it with a code number or the pseudonym. The relationship between the code number or pseudonym and the actual customer is known only to a few senior managers and their secretaries within the bank. It is important to emphasize that a Swiss bank has an obligation to know the true identity of both the account holder and its beneficial owner, and that there is no such thing as an anonymous account. Because of the constant awareness and strict enforcement of bank secrecy, there is actually little need for numbered accounts, and it should be noted that they incur additional overheads for the bank (it is more difficult to validate transactions to and from such accounts). For all these reasons, the stories one reads about anonymous, numbered accounts are fiction.
Opening a Swiss Bank Account
If you would like to open a Swiss Bank Account, first find out what type of account you need. A Private Swiss Bank Account is for HNWI's (High Net Worth Individuals) and offers a prestigious service. Regular Swiss Bank Accounts can be expensive to maintain.
Swiss laws designed to prevent money-laundering are very strict. The Swiss bank is required to know its client sufficiently well to ensure that the funds being placed on deposit are unlikely to be coming from illegal activities. Opening an account on behalf of someone else is very tightly regulated, and those allowed to open such accounts must meet the same requirements as banks with respect to knowing the client. While each bank may set its own internal policies to ensure compliance with the money-laundering legislation, most banks require a personal interview before opening an account. The standard policy is therefore to interview the client at the bank's offices in Switzerland, make copies of identity documents (passport) and any other relevant information, and discuss how the account will be used and the source of funds. Ony after evaluating this information will the bank decide whether to accept someone as a client. We advise extreme caution before becoming involved with a Swiss bank without going through these formalities.
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