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End of an era Banking secrecy no longer quite so secret

bank depot

Banking secrecy - under attack over the years

(© KEYSTONE / TI-PRESS / GABRIELE PUTZU)

Switzerland, the world's biggest centre for managing offshore wealth, has begun automatically sharing client data with tax authorities in dozens of other countries.

The Federal Tax Administration (FTA) said on Fridayexternal link it had for the first time exchanged financial account data at the end of September under global standards that aim to crack down on tax cheats.

The exchange took place within the framework of the global standard on the automatic exchange of information (AEOI).external link

+ Why Switzerland said goodbye to banking secrecy

“Identification, account and financial information is exchanged, including name, address, state of residence and tax identification number, as well as information concerning the reporting financial institution, account balance and capital income,” the FTA said. “The exchanged information allows the [local] tax authorities to verify whether taxpayers have correctly declared their financial accounts abroad in their tax returns.”

Countries involved

The initial exchange was supposed to be with European Union countries plus nine other jurisdictions: Australia, Canada, Guernsey, Iceland, Isle of Man, Japan, Jersey, Norway and South Korea.

“Cyprus and Romania are currently excluded as they do not yet meet the international requirements on confidentiality and data security,” the FTA said.

Transmission of data to Australia and France was delayed “as these states could not yet deliver data to the FTA due to technical reasons”, it said, adding that it also had not yet received data from Croatia, Estonia and Poland.

Exchange 

Around 7,000 banks, trusts, insurers and other financial institutions registered with the FTA collected data on millions of accounts and sent it on the Swiss tax agency. The FTA in turn sent information on around two million accounts to partner states. It said it could not provide any information on the amount of financial assets.

The annual data swap will expand next year to about 80 partner states, provided they meet requirements on confidentiality and data security. The OECD Global Forum on Transparency and Exchange of Information for Tax Purposes reviews states' implementation of the accord.

Under international pressure, Swiss banking secrecy has weakened for years, meaning the well-off can no longer hide wealth in Swiss institutions. The changes have put Switzerland in fierce competition with faster-growing centres like Hong Kong and Singapore.

Reuters/FTA/swissinfo.ch/ilj

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