Swiss Proposal for Further Due Diligence on Untaxed Deposits by Foreigners (6/10/15)

Catherine Bosley, Swiss Government Wants Banks’ Extra Care to Avoid Untaxed Money (Swissinfo 6/5/15), here.  Key excerpts (emphasis supplied by JAT):

Switzerland’s government wants banks to toughen up checks to avoid accepting untaxed assets, possibly including a refusal to do business with a client who can’t show the money has been regularized. 

For clients from countries that aren’t covered by automatic exchange of information agreements, banks will need to conduct risk-based checks, the government said on Friday in a message to parliament. Lawmakers were asked to stiffen the current anti- money-laundering law. 

“As part of the measures to achieve a tax-compliant financial center, the new due-diligence requirements should prevent the inflow of untaxed assets to Switzerland,” the government said in a statement. “The details of the risk-based assessment will be established by the supervisory authorities and the recognized self-regulatory organization.” 

Switzerland has taken several steps to rid itself of its image as a haven for untaxed assets, including negotiating a pact allowing the automatic exchange of tax information of bank- account holders with the European Union. The accord would effectively end banking secrecy for citizens of EU countries with offshore accounts in Switzerland. Parliament will debate changing Swiss domestic law to allow the automatic exchange of information this autumn, the government said. 

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According to the Swiss government’s proposal, which parliament will need to vote upon, banks wouldn’t be allowed to accept new clients if they suspect their money is untaxed. Should a fresh deposit by an existing client raise red flags, the bank must check up on the clients’ entire assets and -- should it have doubts -- request the client demonstrate his or her tax compliance. If the client cannot do so and or hasn’t entered into the process of regularizing the money, the bank must dissolve the business relationship, the government said. 

“The business relationship will not be terminated in cases where it is not possible for the client to provide proof of tax compliance or to regularize the tax situation without running the risk of unreasonable adverse effects,” it also said. 

The stepped up due diligence requirements would not apply to foreigners living in Switzerland and also not to U.S. citizens, who are covered under the U.S. Fatca law designed to clamp down on tax evasion.

I would make comments about the bold-faced items, but most readers can already anticipate my comments, so I will forego them.