ZURICH: Swiss private banks have spent much of the past decade trying to rid themselves of lucrative accounts used to avoid taxes. But news of an international tax probe at Credit Suisse last month showed that Switzerland has further to go before it can escape the shadow of its image as a tax haven.
Banks have written to tens of thousands of clients ordering them to “regularise” their affairs in recent years, either by proving they are tax compliant or taking their money elsewhere. Customers have withdrawn billions of francs as a result — often some of the banks’ highest-margin business.
And yet the banks are still not in the clear. In 2017 they expected challenges in exotic destinations. Switzerland has signed up to an ever-expanding list of countries whose tax authorities would automatically get information on Swiss banks’ clients. Countries such as Indonesia have worked through tax amnesties incentivising individuals to declare untaxed income.
But the problem has resurfaced on their doorstep in Europe, where clean-up work has been most intensive. Investigators descended on Credit Suisse’s offices in the Netherlands, UK and France on March 30 searching for information about “dozens of people who are suspected of tax fraud and money laundering”. Dutch prosecutors, who co-ordinated the raids, said criminal investigations had also taken place in Germany and Australia.
The situation baffles Credit Suisse, which had thought it was “done” with regularising its European client base. “We have really made a lot of effort to deal with the past very proactively over the last number of years,” said Iqbal Khan, Credit Suisse’s international wealth management boss. “We are committed to running a compliant business.”
Financial regulator Mark Branson said automatic information exchange “essentially completes the process” of regularising accounts. But he warned that Switzerland’s image would continue to take knocks. “Those headlines will be with us until everyone has worked through the issues of the past and that will take some time — and was always to be expected,” Branson told reporters.
