How to Deposit Money in Swiss Bank Account

Swiss National Bank

There is always an aura of of secrecy associated with Swiss Bank accounts. Scenes of bank executives accompanying the account holders to the hidden vaults through long corridors and punching in the secret codes have been a part of Hollywood movies for years.

The notion is that no questions are asked if you have the secret code for a 'numbered account' in a Swiss Bank. Some of these descriptions are a bit exaggerated but these aren't entirely without a reason. Swiss Banks are known for their unwavering commitment to client confidentiality and the secrecy of transactions.

In recent days, there is a fresh Indian angle to the Swiss Bank saga. According to reports, Indians' funds in Swiss Banks jumped to over Rs20,700 crore in 2020, the highest in 13 years and the increase in funds of Indian clients with Swiss banks, from Rs 6,625 crore in 2019, reverses a 2-year declining trend.

Let's first understand what are Swiss Bank accounts are all about.

What is different about Swiss Banks?

Switzerland has a high regard for personal privacy and confidentiality even in the new transparent environment. Bank client confidentiality means that the banks have a duty to keep confidential all facts that involve their clients. At the same time, it is a right of the client, for it is the clients not the banks who are entitled to the protected data. The right to privacy is a mainstay of the Swiss legal system, and is laid down in the Federal Constitution (section 13).

Why there is a high interest in Swiss Banks?

Because of the higher degree of confidentiality offered by Swiss Banks, the rich in many countries still prefer to park their money in Swiss accounts hoping that it offers them a relatively higher degree of confidentiality. Not all these deposits are black money or tax-evaded money.

But, does it mean anyone can operate anonymous accounts in Swiss Banks-- the 'numbered accounts'?

There we have a bit of exaggeration. Unlike what one sees in thrillers and media reports, there is no such thing as an anonymous account in Switzerland. Banks must have the basic details of the account holder and some way to track the account holder if a need arises.

Then why people prefer Swiss banks?

Even then, this is still  a high degree of secrecy compared to other banks where any account details can be accessed by any employee of the bank. The name of the holder of a numbered account is known, though only to a small group of people inside the bank.  As far as bank client confidentiality is concerned, there is no difference between numbered accounts and any other sort of account.

So, how do I open a Swiss Bank account?

There are many banks in Switzerland. Any non-resident, above the age of 18, can open an account with basic KYC (know your client) documents such as Passport details, source of income and permanent residency details. Most Swiss banks allow non-residents to open an account with these basic details. If you want to open an account from abroad, the bank may ask for authorised documents.  Swiss banks require staff to identify the person opening an account and, where necessary, to establish the identity of the beneficial owner.

How well Swiss Banks do in terms of transparency of data sharing?

There has been efforts from the Swiss banks to be more transparent in sharing data with world nations. Since 2017 Switzerland decided to implement a global agreement aimed at preventing tax evasion across the world. In October, 2020 the Swiss Federal Tax Administration revealed that it had provided details of around 3.1 million bank accounts held by foreigners (or those with a fiscal residence abroad) to their countries of origin or residence. Around 8,500 financial institutions like banks, trusts and insurers participated.

In December, 2020, India  got the second set of Swiss bank account details of its nationals and entities under the automatic exchange of information pact with Switzerland. India is among the 86 countries with which Switzerland's Federal Tax Administration (FTA) has exchanged information on financial accounts within the framework of global standards on AEOI this year.

Why India is in news now?

According to reports, Indian's funds in Swiss Banks jumped to over Rs20,700 crore in 2020, the highest in 13 years and the increase in funds of Indian clients with Swiss banks, from Rs 6,625 crore in 2019, reverses a two-year declining trend. However, customer deposits fell for the second year. The increase in aggregate funds of Indian clients with Swiss banks, from 899 million Swiss francs (Rs 6,625 crore) at the end of 2019, reverses a two-year declining trend and has taken the figure to the highest level in 13 years, according to a PTI report.

Is this the black money stashed abroad?

Black money typically refers to the money on which tax is not paid in the respective jurisdictions. But, these are official figures reported by banks to the SNB and do not indicate the quantum of the much-debated alleged black money held by Indians in Switzerland.

How India responded to these reports?

Reacting to these reports, the Indian finance ministry has questioned such a jump saying there did not appear to be any 'significant possibility' of such an increase and has sought details from Swiss authorities. The Government said customer deposits held through fiduciary accounts have actually fallen since 2019.

Then what could be the reason for such a jump then?

According to the Government, the possible reasons for an increase in Indians' share of funds in Swiss banks could include rise in deposits held by Indian companies in Switzerland, increase in deposits on account of Swiss bank branches in India and rise in transactions between Indian and Swiss banks.

How to Deposit Money in Swiss Bank Account

Source: https://www.moneycontrol.com/news/business/companies/explainer-swiss-bank-accounts-whats-attracting-the-rich-to-these-banks-7064651.html

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