Monday, June 29, 2009

The end of Banking Secrecy [Even in Swiss Banking]

Its very common in many of the popular novels, characters had some connections with Swiss banks. Some where in the story main character or villian deposit or recover huge anounts of money or other valuables from Swiss bank accounts in highly secretive manner. Many movies followed the suit, and here in India many politician accused each other of having huge deposits in Swiss accounts, but upto now there was no way to know how much money is deposited in Swiss accounts [ofcourse without paying any taxes to the respective governments]. BUt it will not be the case hereafter - Swiss government; under tremendous pressure from other governments agreed to demolish its banking secrecy.

Banking secracy is very important in Switzerland. Article 13 of Swiss constitution states,

Right to Privacy

1. Every one has the right to privacy in their private and family life and in their home, and in relation to their mail and telecommunications

2. Everyone has the right to be protected against the misuse of their personal data

And for many years many people used these banks to hide their money, how much? no one knows, in many countries politicians and media accuse others for hiding some astronomical figures in Swiss banking accounts. It gone well for decades but in this deep economic crisis cash strapped governments from all parts wants there share; and they know that it will be a huge bonanza for their economy. And the enormous pressure from other governments finally forced the SWiss to open up. and in the end Swiss Government agreed that they will adopt the banking transperency rules of OCED [Organisation of Economic co-op and Development] which will open the Tax havens.

These tax havens are so popular, because of the fact that they will not ask for income-tax from non-citizens and their banks ask no questions about their money. It is estimated by Guardian that around 13 trillion $ is deposited in these tax havens and beyond the reach of anyone including the Government.

The motion was started from Germany's side. German Intelligence was successful in getting a CD, from an informer in a famous Swiss bank in the early 2008. It contained the information about some 1500 tax dodgers. They also offered the name of citizen's to the respective governments with out any extra charge and many accepted the offer.

Later France too joined in the motion. After that US inland revenue thretened the largest bank of Switzerland -UBS- with a law suit to disclose the name of 350 US tax dodgers and finally bank surrendered the data. By now UK too joined in the motion to unmask the tax-havens. Finally in March 14 they reached a deal with Swiss government and this makes an end to the legacy of banking secrecy of Switzerland.

But another interesting thing is that some reports states that the CD containes the name of some 150 Indian citizens. now the data releted to Indian citizens are freely available to Indian Government if they wants, but it is yet to see what will be their action on it.According to the calculations of major political parties from India - Indian's deposit alone will run into a trillion. BJP calculated the amount as $1.5trillion, and CPI(M)] calculate it as $1.4trillion. Will the government acquire the CD ? will it take any action based on it? Time will give the answer...

Any way if Guardian is correct it will be a feast for the government's across the world. $13trillion is opened for them [What is the value of US GDP? its only $14.334trillion], just like a heaven in this deep economic crisis.


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