Dear A-Letter Reader:
A news dispatch appeared this week that got a lot of coverage in Switzerland, but was generally ignored elsewhere. But to those of us freedom lovers who advocate offshore financial activity, including recommending Switzerland as one of the world's best asset havens, this story needs to be addressed.
Datelined from Zurich, it stated that "the United States has confirmed it has been monitoring international financial transactions, including those in and out of Switzerland, for almost five years. The Swiss government has remained quiet on the issue, but data protection experts and lawyers are concerned by revelations that the U.S. that the U.S. Treasury had been tapping into records of the Belgium-based Society for Worldwide Interbank Financial Telecommunication (Swift), looking for evidence of potential activity by terror groups."
Swift is a privately run cooperative founded in 1973 and headquartered in Brussels, Belgium that electronically transmits millions of cash transfers every day to more than 200 countries. The network handles some nine million transfer instructions and confirmations a day with a value of about US$6 trillion.
Now, dear reader, you better believe that the U.S. money snoops who say they are looking for terrorist cash are also looking for tax evasion, money laundering of all kinds and any other indictable offenses.
Naturally enough, the question arose as to whether the U.S. government having wholesale Swift access to hundreds of millions of wire transfers since Sept. 11, 2001 has compromised the Swiss banking secrecy mandated by law since 1934. In Switzerland 99 banks and 254 institutions are connected to Swift, with a daily transaction value of some SFr200 billion (US$160 billion).
Although the Swiss Bankers Association says that Swiss banking secrecy had not been endangered or violated, the Swiss Federal Data Protection Commissioner, said he was alarmed. And well he might be. Switzerland cooperates in foreign criminal investigations. It's no longer possible to have a truly anonymous Swiss bank account, and Switzerland now participates in the EU savings tax directive that withholds taxes from most interest bearing investments of EU residents.
But however much the U.S. money police may have seen in the records of Swift wire transfers, Switzerland still is home to fully one-third of all private wealth in the world. It has a centuries old tradition of confidentiality that will only be breached if someone is suspected of committing an action that the Swiss consider a crime. Tax evasion is not considered a crime in Switzerland, though tax fraud (falsifying documentation, for example) is.
Despite the privacy setbacks, the Swiss financial system still has plenty going for it. Unless there is a strong suspicion of criminal wrongdoing, under Swiss law it is still a crime for bankers to violate the secrecy of their clients. Swiss banks are prohibited from responding to inquiries about an individual account, whether from attorneys, credit rating services, or foreign governments. The law punishes violations of bank secrecy with fines up to Sfr50,000 (US$33,000) and six months in prison. In most cases, the Swiss government cannot obtain information about an account without a court order. To obtain an order, investigators must demonstrate the probable violation of Swiss law and that there is reason to believe the particular account at issue is involved in that violation. (Contrast that with the U.S., where the FBI and other police agencies have direct and secret access to all financial information and where bankers are forced to act as government spies).
So what if the U.S. money cops have spied Swift cash going in and out of Switzerland? Under Swiss law the U.S. will have to show clearly that specific cash is criminally tainted before the tight-lipped Swiss will budge, and then only after being served with a court order which can be contested. There are still a few places in the world where sanity and financial privacy remains.
That the way that it looks from here,
BOB BAUMAN, Editor