What Competitors Should Know About Swiss Banks

by JRO on January 11, 2014

  • Sharebar

Swiss banking has long been known as the best private banking in the world. Born out of the Swiss Banking Act of 1934, Swiss banks have protected the identities of their banking clients while also maintaining rigorous programs for compliance that coincide with international banking standards. Individuals looking to gain a certain level of anonymity for their banking transactions are well served by the banking laws of Switzerland.

Although some pressure has mounted recently from the United States and the European Union (it should be noted that Switzerland has strategic trading memberships and alliances with the EU but is not technically a member) over the long-held tradition of Swiss banking secrecy, Swiss banks play a vital role in maintaining the stability of the country’s currency. A non-Swiss bank should be aware of the fundamental principles guiding Swiss banks. These principles include a rigid adherence to customer privacy.

More on the Swiss Banking Act of 1934

The Swiss Banking Act was created in 1934 to protect the personal information of customers, domestic and foreign, doing business with Swiss banks. The Act came into existence to protect French government officials and wealthy citizens who were facing scrutiny for keeping their assets in Switzerland. A list circulated by a French parliamentarian, Fabien Alberty, listed the names of several politicians, members of the clergy, and members of the wealthy Peugeot family as tax evaders. This public scandal threatened the further flow of foreign assets into Swiss Banks, which were necessary in order to maintain the strength of the country’s banking system.

Fundamental Principles of Swiss Banking

The fundamental principles of the Swiss banking system are rooted in the dedication to the idea that the rights of the customer come above all else. This protection of a customer’s anonymity in their financial dealings helps the flow of currency and the strength of the country’s economy.

One myth about the anonymity principle underlying the Swiss banking system is that it fosters lawless behavior by those individuals looking to hide assets from taxation in their native countries. Although the secrecy and anonymity afforded customers who chose to place their assets in Switzerland is a cornerstone of the system, it does not provide a complete safe haven for tax fraud and other criminal activity. Switzerland has participated in cross-border information exchanges that have allowed foreign governments to gain information necessary to prevent fraud and abuse.

What Non-Swiss Banks Can Learn from Swiss Banking

A non-Swiss bank can glean much from the practices established by Swiss banks as they relate to customer service and satisfaction. In the United States, as an example, customer dissatisfaction with the banking system is at an all-time high. Much of this dissatisfaction has been brought on by the performance of banks in the wake of the financial crisis of 2008 and the bank bailouts that were necessitated by the risky behavior of certain banks during the mortgage crisis. According to a Gallup poll from June 2012, consumer confidence is at 21 percent for the banking sector, which is a mere 4 points higher than the US public’s faith in Congress (17 percent).

Byline

Rory Stanford writes on accounting, finance, banking, business, international commerce, investment & other related matters. Those interested in accounting are strongly encourages by Rory to check out the accounting jobs with moneyjobs.com.

No related posts.

Leave a Comment

*

Previous post:

Next post: