Switzerland still tops financial secrecy index

Swiss banks like UBS, the country's largest bank, have come under fire over their banking secrecy regulations Keystone

Switzerland’s efforts to comply with international transparency standards have done little to appease its critics, according to the authors of the Tax Justice Network’s 2013 Financial Secrecy Index.

Switzerland’s retains a “fully deserved top place” because the recent concessions on financial secrecy, particularly those to the US, only “pierce Swiss secrecy in narrow, limited ways”, says the report.

Several countries have turned up the heat on Switzerland on issues related to tax evasion and banking secrecy in recent years. The United States have indicted and prosecuted several individuals, made banks pay fines and forced some financial institutes to stop operating.

In response to international pressure, Switzerland has made efforts over the past years to comply with international tax standards so it can better safeguard the integrity and reputation of its financial centre.

On October 15, the Swiss authorities signed the Organisation for Economic Cooperation and Development (OECD) convention on mutual administrative assistance in tax matters, which allows for the exchange of tax information upon request.

Playing the spoiler

Still, the report claims that Switzerland has often extracted “painful concessions” in exchange for signed treaties and has been “playing the spoiler”, striving to block or derail international transparency initiatives.

The authors concede that the OECD convention would improve the country’s secrecy score in future, if the treaty is ratified. At the same time, the organisation criticises that Switzerland had opted for the “weak on request model”

The convention provides for all forms of mutual assistance including exchange on request, spontaneous tax examinations abroad, simultaneous tax examinations and assistance in tax collection, while protecting taxpayers’ rights, according to the OECD. Automatic exchange of data is possible but requires additional agreements between the states involved.

“Once again, our index shows how responsibility for protecting the world’s citizens from the scourge of offshore financial secrecy lies not with the ‘usual suspects’ in small Caribbean islands, but with big, powerful OECD countries,” said Markus Meinzer, lead researcher for the Financial Secrecy Index.

The Tax Justice Network is a non-governmental organisation that focuses on promoting transparency in international finance.