Reasons why Swiss Bank is Famous for Black Money

Swiss banking regulations prohibit bank clients from being investigated or having their assets seized unless the account holder has committed or is being investigated for a crime under Swiss law. In this articles, we will discuss extensively why Swiss bank is famous for black money.

The government of a person who lives in a country where it is illegal to be gay, for example, would not be allowed to seize a citizen’s Swiss bank account if he or she was found guilty of being gay, because this is not a crime under Swiss law. Even if the account holder is branded as a criminal in their own country, their wealth would be protected in this instance.

Why Swiss bank is famous for Black Money?

When fraud occurs, the name ‘Swiss Bank’ is frequently mentioned. Aside from that, the government occasionally guarantees citizens that money would be returned from a Swiss bank. So, why do affluent individuals deposit their money in Swiss banks, and why Swiss bank is famous for black money and fraudsters depositing their money in Swiss banks? What is the Swiss bank’s unique feature that no other bank offers?

Any bank official in Switzerland is prohibited from disclosing any account holder’s information under Swiss banking law. When a Swiss court grants permission, a bank representative can release the account holder’s information. And when an account holder is accused of criminal offenses such as money laundering or fraud, a Swiss court will normally grant permission. As a result, all active Swiss bank accounts might be classified as clandestine accounts.

When opening a Swiss bank account, one must go through the same KYC process and documentation as a regular bank. However, the account holder’s name and address are not listed in Swiss bank accounts. Also, the account you open is made up of code digits. Hence, why Swiss bank is famous for black money.

Why do criminals use Swiss bank accounts?

The account holder’s name and address were not mentioned in the bank’s statements and records. All information about the account holder is kept private as a result of this. As a result of these factors, numerous people open accounts with Swiss banks. Many governments from various countries dislike the Swiss bank’s method and have warned them to halt.

However, the Swiss bank is unwilling to accept. The two largest and most well-known top Swiss banks, UBS and Credit Suisse, are where the majority of accounts are opened. In Switzerland, however, there are over 400 banks. UBS accounts for 50 percent of all Swiss bank accounts opened each year. And UBS has a deposit of more than 2.5 trillion dollars to do so. It means that over 2.5 trillion dollars have been deposited in Swiss banks. And the sum is almost equivalent to India’s GDP. Then it’s easy to guess how much money the Swiss bank has.

When it comes to Swiss bank liquidity, the majority of Swiss banks do not deal in commercial lending, hence they are regarded as very liquid. They have a minimal danger of a liquidity constraint as a result of this. Because Swiss banks do not provide additional commercial loans, they are less likely to face a liquidity shortage. As a result, it is regarded as a secure bank. All these mentioned reasons boil down to the reason why Swiss bank is famous for black money also.

Other reasons why criminals use Swiss bank account

Besides answering to the question; why Swiss bank is famous for black money, it also provides other benefits in addition to those already listed. Because the Swiss government seeks to remain impartial in global political projects, the Swiss franc, the country’s currency, is likewise very stable. It also has a fairly stable government and financial system. When a person deposits money in a Swiss bank, the bank (Swiss banks) does not pay interest. Rather than paying fees to the Swiss banks, account holders pay fees to the Swiss banks. UBS, for example, charges account holders 0.6 percent in fees. Swiss banks usually require a minimum deposit of $50,000.

Swiss Bank Black Money List

India has been one of the most important nations with which Switzerland has provided information about Swiss banks and other financial institution clients for the past two years, and it is projected to rank high this year in terms of information about real estate properties.

Officials familiar with the situation indicated both resident and non-resident Indians, as well as Indian companies, will make up a significant portion of the entire list of persons included in Switzerland’s information exchange this year.

Furthermore, on receipt of requests for administrative help in cases involving financial wrongdoings, such as tax evasion, Swiss authorities have already supplied information about more than 100 Indian citizens and entities, according to the sources.

In recent years, this number has remained consistent.

Data and information shared by the Swiss bank include Identification, account, and financial information, such as:

  • Name
  • Address
  • Country of residence and tax identification number
  • Information concerning the reporting financial institution
  • Account balance and 
  • Capital income.

The first, Second and Third Black Money India List

In September 2019, India received the first set of details from Switzerland under the AEOI (Automatic Exchange of Information). It was one of 75 countries to receive such data that year.

India, along with 85 other recipient countries with whom Switzerland’s Federal Tax Administration (FTA) exchanged financial account information last year under the framework of global standards on AEOI, received the second set of Swiss bank account details of its nationals and entities in September 2020.

FREQUENTLY ASKED QUESTIONS

Who has black money in India?

It is uncertain how much black money Indians have put in overseas banks. According to some reports, a sum of US$1.06–$1.4 trillion is illegally kept in Switzerland… Various groups’ estimates of black money in India.

Why Swiss bank is famous for black money?

Swiss banks maintain such a high level of confidentiality and security that the wealthy with hidden, untaxed slush funds feel them be safer than banks in other tax havens. Banks in Switzerland pay little or no interest on deposits. They even charge a fee to keep the money on hand. Their vaunted privacy walls have begun to crack.

Is there such a thing as black money?

The most basic definition of black money is money that is kept hidden from tax officials. Money obtained through criminal activities, as well as black money, is obviously not reported to the tax authorities. The income from a legal activity that is not disclosed to the tax authorities falls into the second category. The Swiss government has no objection to having this form of currency or money on hand, which is why Swiss bank are famous for black money and also why black money is deposited in Swiss bank.

Is the black money stored as Indian currency in Swiss bank?

No, if you believe that Swiss banks secretly keep money in physical form in their lockers, you are mistaken. Swiss banks, like any other bank, use deposits to invest in companies, therefore black money is not kept in Swiss banks like Indian currency. They accept a variety of currencies, including USD, EUR, GBP, YEN, and others, but convert them to EUR, USD, or Swiss Dollar before using them. When a person visits one of the several Swiss banks (or banks that operate in Switzerland and are governed by Swiss law), he or she has the option of depositing money by wire transfer or cash. In either case, the money is converted before being deposited. All these process is also one of the reasons why Swiss bank is famous for black money.

Is it lawful to have black money?

All earnings acquired through illicit activities and otherwise legal income that is not recorded for tax purposes are referred to as “black money.” Money laundering allows black money to be illegally disguised as legal tender.

What is illegal about keeping money in Swiss banks?

Nothing is against the law. Swiss banks, like other country banks, are legal.

Anybody can open a Swiss bank account. However, due to some unusual circumstances involving privacy, the level of scrutiny placed on supplying official identification papers is higher. And this is also why Swiss bank is famous for black money.

Depending on the type of account you choose, there are also varied minimum balance requirements. These can cost anywhere from a few thousand dollars to millions. 

The low levels of financial risk and high levels of privacy offered by Swiss bank accounts are the key advantages. The Swiss economy is one of the most stable in the world, having never been embroiled in a war in hundreds of years.

Conclusion

To hide their dirty money, many people open accounts in Swiss banks. They usually choose someone who gives them Swiss francs and then deposit the francs in a Swiss bank. Many people form corporations in those islands where taxes are lower, then open accounts in Swiss banks in the name of the company to keep their identities and black money is hidden. India’s money is also placed in Swiss banks in large amounts. For the Swiss government law indicated above, it is nearly impossible to recover the black money from a Swiss bank.