When most people hear the words 'Swiss Bank Account', their imaginations immediately turn to fast paced adventures, espionage, and elaborate security checks punctuated by special keys, x-rays, pass codes, and a multitude of barred rooms. Unfortunately, in reality, Swiss banks aren't all that different from every other bank in the world, and they aren't reserved for super-rich villains.
The real difference to be found between Swiss banks and those the rest of the world over is actually reflected in the culture of extreme privacy. Most people seek out Swiss banks for the unparalleled commitment they show to keeping clients' private information just that: private. It is this factor which draws the super rich from all over the world to Switzerland and fuels the mystery surrounding the Swiss banking system.
While this may be a disappointment to some, it’s not as though Swiss banks are boring. Swiss bank accounts are still pretty interesting, and do invite a certain level of intrigue. We're going to briefly look at the history of Swiss banking to see how it became what it is and what make it so appealing to story tellers and wealthy internationals.
In 1713, a group of influential Swiss bankers met at The Great Council of Geneva. There, they committed themselves to strict rules prohibiting any sharing of customer information except in extraordinary circumstances. Just over 100 years later, in 1815, Switzerland had its famous international neutrality officially recognised. In 1847, after a short revolution of less than one month and fewer than 100 casualties, mostly from friendly fire, the country committed itself to federalism, and thus to the values of a private sphere.
Through the global boom of the late 19th and then early 20th century, Swiss accounts became renowned for their level of privacy and the low-risk nature of their accounts. This period also brought political upheaval and economic busts which scared many of Europe's wealthy into squirreling away vast sums of money, large amounts of gold, and huge collections of rare and valuable goods.
Pressure from many governments, but especially Nazi Germany, to return the wealth of many dead, destitute, or politically targeted clients led the Swiss government to pass the Banking Act of 1934. Worried that bankers would be forced or coerced into divulging information, the 1934 regulations made those actions illegal to the point of imprisonment, where before it had merely been punished with a fine or reprimand. This simple act has made Swiss banks so tight-lipped that many accounts opened and filled during those years remained inaccessible until very recently, with some still shut.
Swiss banks are not that different from normal bank accounts elsewhere in the world. While they do tend to cater to specific clientele (some to the super rich, some to Swiss citizens, and so on), people can open an account in any of them limited only by how much they have to invest and into what type of account they want to put it.
After the bank requirements are met, account selection falls into one of three general categories: “Savings accounts”, which are just normal savings accounts with high interest and limited transaction options. “Salary accounts”, which give the client less interest, but a few more transaction options. And “current accounts”, which offer little interest, but normal transaction options from cheques to payments. Savings accounts tend to be used by foreign clients looking to 'save' money, while current accounts are used more by a typical Swiss citizen.
As we've already said, accounts aren't guarded by futuristic securities, buried beneath layers of doors, or completely anonymous as even if an account is only identified by a number or codeword, the bank still has some record of who the client is... it's just impossible to identify that person if you're not the banker, and he or she is sworn to secrecy by both ethics and law. This secrecy gives Swiss banks that one special feature which has made them so (in)famous: “dormant” status.
Unlike banking in more transparent financial markets, the death of a Swiss bank's client does not signal legal action and the execution of wills. Such actions would require someone contact the bank, but no one else would know of the account. Not only that, but the bank might not know of the client's death because... why would it? Of course, if the banker knows for sure his client is dead, he will take action, but it is not unexpected for clients to stay away for years on end. After ten years without contact, however, the banker is obligated to seek the client out.
But what if this search ends in a dead end, literally? Then the bank seeks out the named heir (who may not know of the account). If no one is named, the bank tries to find living relatives to sort out wills and whatnot. If they still find no one with a claim to the account, the bank reports the loss of client to the Swiss banking ombudsman, an official who then decides what to do with the account. In many recent cases this meant evaluating the account and putting it on an international list which Holocaust survivors or other descendents from European refugees, POWs and the like can check and claim – with proper proof.
So Why Open An Account?
The main theme throughout the history of Swiss banking is neutrality and privacy. They take those things really seriously – to the point where some governments (like the US) can't even get access to names of clients. This is so important to Swiss bankers that they have been known to turn governments away, refusing to divulge information.
What all this means is that if someone were to open an account in Switzerland, no government, employer, family, stranger - virtually no one except the owner - would know about the account. Not only that, but no one would be able to access the account except the owner (barring some obvious, extraordinary crime). The appeal of this is pretty self evident: no matter what happens to you or your money anywhere else, your Swiss account is just going to sit there until you go get it. Unlike most banks, your records are completely non-public, so governments can't find them. It's almost as if the money just doesn't exist.
The Future of Swiss Banking
But it isn't all gold bars and big savings. Swiss banking is entering a new era of its life where the privacy that has made it so popular may be over. The same reasons that one might be drawn to opening a Swiss bank account are the same reasons that the international community has such issue with them. Whether it is a government seeking to find evidence of criminal activity or a Holocaust survivor looking to regain what was stolen, the intense privacy regulations of Swiss accounts constantly frustrate international cooperation.
Although Swiss banks encourage clients to remember and adhere to the laws of their home nations, it is obvious that the Swiss system draws in unsavory types looking to evade taxation or secret away illegal profits. The banks may not be the same thing we see in movies, but the kinds of people using them likely are.
Now it seems years of intense pressure from governments has worn the Swiss down because as many as 40 out of about 300 Swiss banks have hinted that they may be willing to provide the US government with the names of American citizens who have accounts with them.
This decision is not without motivation, though. As we said, Swiss banks usually refuse to share information with government, but they cherish privacy so highly that it is not uncommon for bankers to actively prevent governments from accessing information, sometimes going so far as to interrupt or slow down official investigations altogether. In light of this, the banks who have agreed to cough up the names have done so for the promise of immunity if anything not on the straight and narrow is found – probably the strongest evidence that lots of stuff that isn't on the straight and narrow is actually happening.