Swiss Banks have long been viewed as a discreet and safe place for the rich to park their funds. It is also a place where India’s filthy rich have stored their (frequently) ill gotten gains to evade tax or avoid having to declare the source of their income. We look at what has earned Swiss Banks the formidable reputation they have and at what Indians with Swiss Bank accounts are doing in light of the government’s claims of going after those with accounts.
These banks will never reveal who has accounts with them. Whether there are criminal cases pending against a person or whether the tax authorities are after them, the banks are not interested in knowing how one came by their money. And the money is safe as houses. The account holder has the guarantee that their money is safe and will be returned in full whenever required.
The Swiss franc is among the most stable currencies in the world and it is virtually inflation proof. It is backed by 40% gold reserves at all times. Plus the Swiss economy is among the most solid in the world. So is it any wonder that UBS or United Bank of Switzerland, Credit Suisse Group, Bank Julius Baer, Pictet and Cie are among the most trusted in the world?
It is well known that Swiss Banks are the preferred place for Indians to park their funds and the government’s poll plank to ‘bring back black money’ necessitated them going after these accounts. So the Indian authorities have recent sent about 20 ‘administrative assistance’ requests to Switzerland to obtain details of Indians who have misused Swiss Banks for their own purposes.
Considering that the banks are legally required to withhold information about their account holders, is it likely that such information will be made available? Is it possible to obtain information by submitting proof of the account holders’ wrongdoing?
A new pact for the exchange of information is also signed between Switzerland and India.However there are many loopholes. Experts are not optimistic about the recent treaty being able to yield too many results. Tax evaders and hoarders will have plenty of time to remove their funds from Swiss banks and to park them in other tax havens. The information will trickle in only by 2019 and will be available only with effect from 2018.
Experts (and perhaps many hoarders) are also wondering whether Bitcoin – the decentralized virtual currency or ‘cryptocurrency’ that facilitates peer to peer transactions without intermediaries is likely to be an attraction. This is a secure solution that offers anonymity and secrecy say some commentators. So is Bitcoin likely to become, in a sense, the next generation Swiss Bank Accounts?
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