Despite a largely unaltered image abroad, the finance ministry official behind key international negotiations believes the Swiss financial sector will thrive after having signed data exchange agreements that some say spell an end to banking secrecy.
Jacques de Watteville, State Secretary for International Development and Tax Matters at the Federal Department of Finance, recently helped push through a deal with Brussels that saw Switzerland promise to get rid of certain preferential tax schemes for businesses. In turn, the EU pledged to lift sanctions. And, the financial diplomat negotiated Switzerland’s signing of an OECD treaty that pledges Switzerland’s cooperation in helping countries find tax evaders by exchanging necessary data with other countries.
Does finalising that automatic exchange of data spell the end of the prized Swiss banking secrecy? De Watteville says no.
“It’s a new step in international cooperation against fiscal crimes,” the secretary told the Le Matin Dimanche newspaper. “Simply, in the past, banking secrecy was lifted in cases of money laundering, terrorism, criminality and fraud. Now, we’re adding tax evasion.”
But some critics aren’t convinced the Swiss are really committed to ending tax evasion through their banks. Last week, the young French economist Gabriel Zucman told the Tages-Anzeiger newspaper that through data analysis, he sees offshore money in Swiss banks continuing to increase at a time when “80% of European bank clients’ assets still aren’t being reported to tax authorities.” And he thinks the business remains too tempting.
“For decades, rich bankers helped clients illegally hide assets and earned a lot of money doing it,” Zucman said. “Even though this behaviour is now costly compared to the gains it brings, the business of tax evasion remains far too lucrative. That's why I'm sceptical that things have radically changed.”
De Watteville admits the image other countries have of Switzerland as a tax haven hasn’t changed much “from what people see in Bond films,” but he says a change in mentality is noticeable in diplomatic and official circles since Switzerland signed on to the OECD treaty.
And he believes banks are thriving despite questions about the status of banking secrecy.
“In reality, the total amount of funds being managed in Switzerland has grown, with the departure of certain clients being more than made up for by the arrival of others,” he said. “And, a lot of regularised money stayed in Switzerland, which is a good sign: it means the money wasn’t there just for the banking secrecy, but also because of other favourable conditions in Switzerland like the strong franc, stability, and the knowledge of Swiss bankers.”