Idk if this had been posted already, but can someone explain to me why Swiss bank accounts are so popular among the rich and/or fraudulent? I see it in movies and in the news from time to time. Someone puts a bunch of money away in a Swiss bank account. Why?
In: Economics
Swiss banking laws are super protective of client privacy. They won’t even confirm an account exists unless it’s proven there’s serious crimes involved. Like genocide level stuff
Switzerland once had very strict banking secrecy laws and refused to cooperate with the IRS. Political pressure in the 1990s changed that, but not in a way that movies care about. Today, it’s the Cayman Islands where the rich go to avoid income reporting.
The main reason why is because you can only get in trouble if you commit a crime that is a crime in both countries. So if you are in the UK and commit a crime but it’s legal in Switzerland you are good.
IRS: “Hey bank, I think one of your customers did something illegal, can I look at who he got money from?”
Bank: “No”
IRS: “But he’s really really sketchy!”
Bank:”No!”
IRS: “Seriously, do it!”
Bank:”Make me!”
*Under most governments*
IRS: “Hey, can you make the bank tell me, here’s the stuff that looks sketchy.”
Most Governments: “Yeah, that’s sketchy as hell. Bank! Do it or we’ll do terrible government things to you!”
Bank: “Fine!”
*How the Swiss Government used to act*
IRS: “Hey, can you make the bank tell me, here’s the stuff that looks sketchy.”
Swiss Government: “No.”
IRS: “But…”
Swiss Government: “No.”
Bank: “Sucks to be you!”
But people got sick of it, so they made the Swiss government change it so they could tell banks to comply.
Nowadays countries like Singapore and the Cayman Islands have similar laws to how the Swiss used to act. So they’re becoming the place to put sketchy money.
You know how swiss cheese has holes? Their bank accounts provided *loop*holes preventing people from seeing what they were doing.
Now you can legally avoid government oversight/taxes if you’re rich and move your money into , , and technically , but that’s a bit unethical.
It’s not just about hiding money, also about tax and stability.
If you were working for entirely legal reasons in a slightly dodgy country then you might want to put your money somewhere safe and stable.
Switzerland is that option.
If you were French and worked for two years in Belarus and saved some money, you’d have a choice what to do with that money.
You can leave it in Belarus but the currency might collapse or the government might one day decide to stop people taking money out of the country. Countries do see sudden changes (UK £ lost 10% of value vs EU € after Brexit) and some impose random currency controls (UK used stopped Icelandic banks withdrawing money from UK during the 2008 crash).
Switzerland is very stable and knows not to mess with their banks.
You can take the money directly home, but if that country doesn’t have a tax agreement with your country you may need to treat it like standard income and pay tax again (this is a thing!).
Leaving the money in Switzerland means your government (apart from the US…) will leave the money alone until you choose to bring it home. You can then use this money as a holiday fund or just leave it for a future tax reduction or if you decide to retire abroad.
Obviously these are first world problems, and are ethical grey areas but a large amount of money is treated this way
Latest Answers