Swiss Remain No. 1 For Secrecy In Tax Justice Ranking
07 November 2013
Posted by: Author: Giles Broom
Author: Giles Broom (Bloomberg)
Switzerland, the world’s largest
center for cross-border wealth management, retained the top spot
in a financial-secrecy index by the Tax Justice Network, a
London-based campaign group.
Switzerland, which continues to attract money from poorer
countries, was ranked No. 1 even after succumbing to pressure
from the U.S. to cooperate with a probe of the Swiss financial
industry and after signing more than 40 bilateral agreements on
tax information administrative assistance, the London-based Tax
Justice Network said in a report today.
Luxembourg, Hong Kong, the Cayman Islands and Singapore
trailed Switzerland in the benchmark, which is published every
two years. The U.S., which topped the index in 2009, placed
sixth in the study of 82 jurisdictions.
"In line with a shrinking international tolerance for
financial secrecy, Switzerland has made a few not insignificant
concessions on secrecy, agreeing to exchange information on a
limited basis with selected other jurisdictions, while largely
rebuffing efforts for greater transparency toward other
countries, particularly weaker and more vulnerable developing
countries,” the report said.
An estimated $21 trillion to $32 trillion of private
financial wealth is located in untaxed or lightly taxed secrecy
jurisdictions, according to the Tax Justice Network, a group of
academics, policy analysts and journalists that campaigns for
greater transparency in offshore finance and lobbies governments
to crack down on havens that attract undeclared assets.
The index ranks those jurisdictions based on bank secrecy
rules and the share of the global market for offshore financial
services, using reports by governments and the Organization for
Economic Cooperation and Development and surveys of finance
ministries. Switzerland agreed in 2009 to implement the Paris-based OECD’s standards on tax information exchange.
Switzerland increased private cross-border financial assets
to $2.2 trillion last year and is the largest cross-border
private-wealth center, Boston Consulting Group said in a report
in May. Total assets under management at Swiss banks increased
by 320 billion francs ($347 billion) to 5.6 trillion francs,
with the proportion of foreign assets unchanged at just over 50
percent in 2012, according to a separate study published in
September by the Basel-based Swiss Bankers Association. Undeclared Clients
Switzerland signed a mutual assistance accord with the
European Union on tax matters in October and said it’s adopting
a negotiating mandate to revise EU rules on the taxation of
cross-border savings. The government also agreed this year to
discuss a new system of automatic exchange of information with
other authorities and supported U.S. demands for a voluntary
disclosure initiative for Swiss banks to give up information on
undeclared American clients.
The U.S. Department of Justice is investigating 14 banks,
including Credit Suisse Group AG (CSGN), Julius Baer Group Ltd. and
HSBC Holdings Plc (HSBA)’s Swiss unit, for allegedly helping Americans
hide money from the Internal Revenue Service.
Hundreds of other banks may be covered by a U.S.-Swiss
accord over how to punish firms that used accounts to help
American clients evade the IRS. Swiss banks that seek to avoid
prosecution for fostering tax evasion through secret accounts
held by U.S. clients face penalties of as much as 50 percent of
the value of those assets under the plan announced by the U.S.
government on Aug. 29 and accepted by the Swiss.
Switzerland is unlikely to move from the top spot in the
secrecy ranking unless the financial industry shifts its focus
from gathering assets to implementing more transparent,
spontaneous cooperation with other countries to counter tax
evasion, according to Markus Meinzer, a researcher at the Tax
Justice Network based in Marburg, Germany.
"Swiss bankers are having a hard time because on the one
hand they are being told they have to get clean, and on the
other hand they still have performance targets to achieve,”
Meinzer said in a phone interview. "To fully show its
integrity, Switzerland has to sign up for automatic exchange of
This article first appeared in bloomberg.com.