Home ›› 15 Mar 2022 ›› Opinion
Bank is a word well-known to almost all people of the world, even to school boys and people with little education. Almost, in every country of the world there are different types of banks. Roughly speaking, a bank is an organisaton that provides financial services i.e. depositing, preserving, withdrawing or lending money.
Banks of Switzerland are known as Swiss bank. As Swiss watches are world famous for aristocracy, tradition, design and durability, Swiss banks are also popular in the world but due to different reasons. According to Worldometer (a statistical website owned and operated by Dadax) against a population of 86,58,190 people the number of banks in Switzerland is 254, i.e. one bank for every 34087.36 persons.
Question may be raised regarding such abnormally huge number of banks but the answer is very simple. Rich people from all over the world deposit their money with Swiss banks. For this reason Swiss banks are so popular and widely discussed. Union Bank of Switzerland (1862) and Swiss Bank Corporation (1872) were merged in 1998. Renamed as UBS it started functioning as the largest bank in Switzerland. UBS Group AG and Credit Suisse Group AG jointly hold more than 50 per cent of total deposit in Switzerland with branches home and abroad.
Why Swiss banks are so popular around the world? Protection of information is the main reason. According to the Swiss Banking Law of 1934 disclosing the name of a depositor is a criminal act. Unless any criminal activity is suspected under Swiss law, Swiss banks never disclose any information regarding an account, even its existence, without the depositor’s consent. However, if any government agency claims with evidence that a depositor is involved in a serious criminal act or financial crime then information may be disclosed. The Bangladesh Deputy Attorney General also informed the high court on 26th January that collecting names from a Swiss bank is very difficult.
The system of opening an account in a Swiss bank is almost similar to that of our country. The age of a non-resident of Switzerland must be minimum 18 years. One needs to fill up forms and submit documents for identification and professional status but in some special circumstances security measures are stricter. As provided in Swiss anti money laundering law, documents like passport, professional licence, tax return, company papers, proof of source of fund are required to open an account. Account holders can choose their currency (Swiss francs, US dollars, Euro, or British Pound). Depending on nature of account and policy of that bank, minimum amount of initial deposit and balance varies from several thousand to million dollars.
It is said that Swiss banks are the best overseas banks to hide money illegally earned all over the world. Referring to Swiss National Bank the Times of India reported on 18th June, 2021 that deposit of Indian individuals and firms in Swiss banks jumped to 2.55 billion Swiss francs (over Rs 20,700 crore) in 2020. The Swiss government started collecting details of dormant accounts in 2015 including at least 10 Indian accounts. A few of those are from the period of British rule in India but ironically not even a single dormant account has been properly claimed till today. Money lying in these accounts may be transferred to the Swiss treasury.
Amount of deposit of Bangladeshi nationals with Swiss banks covers a small proportion of total deposit. According to the Swiss National Bank deposits by Bangladeshi citizens was Tk 5,392 crore (603.02 million Swiss Francs) in 2019 against Tk 5,367 crore in 2018. It is equal to total paid up capital of 12 private banks in Bangladesh.
Experts think that uncertainty is a reason for this capital flight. The late Khondkar Ibrahim Khaled, a noted banker and a former deputy governor of Bangladesh Bank, pointed out that this happens mainly in two situations - when money laundering from Bangladesh increases and when non-resident Bangladeshis including businessmen deposit money in those banks. Usually, Swiss banks are preferred for preserving illegal earnings and untaxed money although some Bangladeshis living abroad have also deposited money in Swiss banks.
Is the entire deposit in Swiss banks illegal money? As reported in a local daily Abu Hena Mohammad Razi Hasan (Head of Financial Intelligence Unit of Bangladesh Bank) said, “Many of our expatriates working abroad also deposit in Swiss banks. There is no reason to think that all the money sent to the country.” On the other hand Iftekharuzzaman, Executive Director of Transparency International Bangladesh, said, “Lion’s share of this money is illegally transferred. Switzerland is a signatory of the United Nations anti-corruption convention. It releases information about Bangladeshi nationals’ deposits in the Swiss banks but government, agencies and institutions involved in anti-corruption and ant- money laundering activities took no initiative in this regard. So, other than Swiss banks, capital flight to offshore destinations and island states is also rising.” Some experts think that the amount disclosed by Swiss authority is just the tip of the iceberg. Actual amount is far beyond imagination because taka one lakh crore is being smuggled out of the country every year which is certainly deposited or invested elsewhere.”
However, being directed by high court The Bangladesh Financial Intelligence Unit submitted a report on 26th January to the court citing a list of 79 individuals and organisations named in the Panama Papers and Paradise Papers and measures taken by BFIU. The anti-corruption commission submitted a supplementary report about the involvement of 61 individuals and 7 organsations in the financial scandal.
Due to many reasons, domestic banks are not always considered safe for unlawfully earned money and other places are required. Except Switzerland some island states like the Bahama or Panama are also attractive hubs for depositing black money. Despite strong security that information of around 18000 depositors (including King of Jordan) has been leaked out from Credit Suisse Group (The New York Times, 20th February, 2022). Yet, as an outcome of age-old tradition and certainty of protection of information Swiss banks are still considered sweet to illegal earners.
The writer is a former Commissioner of Taxes. He can be contacted at chinmayprasunbiswas@yahoo.com
