Bankers’ boss says EU treaties could undermine banking secrecy

Swiss Bankers Association president, Georg F Krayer (right) says banking secrecy could be undermined by future bilateral treaties with the EU Keystone Archive

The chairman of the Swiss Bankers Association, Georg Krayer, has warned that banking secrecy could be undermined by future bilateral treaties under discussion between Switzerland and the European Union.

Krayer, who was speaking in Zurich at the presentation of the association’s annual report, also rejected criticism of Swiss efforts to combat money laundering, arguing that much of it had been “wide of the mark and viewed from a narrow perspective”.

Krayer said bilateral negotiations between Switzerland and the EU were likely to lead to “the expansion of judicial assistance in criminal matters”, and that this could undermine banking secrecy.

He highlighted what he described a “new trend” in which some countries seek cross-border judicial assistance before launching criminal proceedings within their own countries.

Usually requests for judicial assistance follow only once criminal proceedings are underway.

Taxation

Krayer said this new phenomenon was also visible in the area of taxation where more and more tax officials were seeking information about their country’s taxpayers via their counterparts abroad.

He argued that this new approach was “diametrically opposed” to the Swiss understanding of the law, and he said he saw no reason for Switzerland to follow suit.

“We cannot allow bank client confidentiality to be whittled away through an unbounded expansion of official administrative procedures … without us having a say in the matter,” he said.

Money laundering

Krayer added that it was difficult to understand criticism of Switzerland over money laundering, when the country had some of the tightest laws in the world.

He said that although most criticism was directed at the parabanking sector – which includes fiduciaries, foreign exchange offices and hotels – the reputation of the entire financial industry in Switzerland was at stake.

“Switzerland is not facing any sort of crisis in its fight against money laundering, nor does it have anything to hide from the rest of the world,” he said.

“Justified criticism has to be taken seriously and the Swiss banks are more than willing to support the implementation of the anti-money laundering legislation. Lecturing of any kind, however, is out of place,” he commented.

Supervision of intermediaries

Krayer said Swiss banks remained committed to the concept of official supervision of all financial intermediaries. However, this did not mean they supported calls for a new “super” government agency.

“We are convinced that the advantages of good self-regulation should not be forsaken or overlooked. Our motto is thus: as little state intervention as necessary and as much self-regulation as possible,” he said.

Krayer also advised Swiss voters to reject a 20 per cent capital gains tax proposal launched by the Swiss Trade Union Federation, when the issue comes to a nationwide ballot in December.

However, the association is supporting a debt-brake package for managing the federal budget and keeping the level of debt in check.

“The fascinating thing about taxes is that new ones are always being invented despite the fact that no one wants to pay the existing ones,” Krayer commented.

swissinfo with agencies