Illegal money-flow in Switzerland

Known cases of illegal “trafficking” (if you may say so) in Switzerland is cross-border tax evasion. Though it might not sound as severe as drug or human trafficking, it still costs governments around the world a fortune, as one recent event that started a few years ago in Europe will show you.

The banking system in Switzerland includes a banking secrecy, which protects the privacy of its clients. This protection is considered as a part of the Swiss legacy, but it is also highly controversial because it allowed people to “hide” their money in Switzerland from their country, which leads to tax evasion as mentioned above.  Since 2006, German authorities obtained several CD that contained information of Swiss bank accounts, including the names of clients. They found out that there were German citizen practicing tax evasion, and they requested that German clients shall report their accounts. Whoever reported their money before the authorities found out (through the CD) was pardoned, at least partially.

Of course, the German government was not the only one who investigated tax evasion. In fact, the prosecutions in Germany triggered a massive chain reaction and authorities across Europe and the United States started a hunt after tax evaders. In one case, the Italian government requested its citizen in 2009 to disclose any hidden money. About 160 billion Euros flowed back into the system, in Italy alone. Another example is the (still ongoing) prosecution, performed by US authorities. Several times, they successfully convicted banks of aiding US clients to evade taxes. 4.1 billion Francs (about the same in today’s USD currency) Were paid back through those processes.


How to continue with the banking secrecy? The Swiss government decided to implement a new standard for the automatic exchange of information. This basically means that foreign clients (that aren’t Swiss citizen) will not benefit from the banking secrecy. The main objective is to prevent any further cross-border tax evasion, and the standard is supposed to come into effect in 2018.

– by Mario D.