Although “bank secrecy” is commonly used to describe Swiss banking discretion laws, experts generally use the more accurate term “bank customer secrecy”.
Bank customer secrecy protects bank customers and their privacy. It does not provide legal protection for banks, as the term “bank secrecy” may wrongly lead one to believe. On the contrary, bank customer secrecy contractually obliges Swiss banks to uphold their customer’s right to reveal details about their financial situation at their own discretion.
Bank customer secrecy is deeply embedded in Swiss legal systems, including laws relating to basic rights of citizens and civil, criminal, banking and data protection laws. It encompasses all information relating to business relationships between banks and their customers. This means that, in addition to details about customer assets, all personal information related to bank customers is also protected. The delivery of negative reports relating to customers is also forbidden by bank customer secrecy codes.
However, bank customer secrecy laws only apply to customers who are not suspected of breaking Swiss criminal laws. Assets accumulated through money laundering and other illicit activities are not protected by bank customer secrecy laws.
The Federal Government’s decision to enter into the automatic exchange of information agreement with the OECD and G20 member countries had a major impact on Swiss bank customer secrecy laws. Swiss banks are now allowed to provide third-parties with information about foreign customers for tax purposes. Bank customer’s sensitive personal information is still protected, but only within the confines of international agreements.
These changes are beginning to impact Swiss citizens as well. Many Swiss bankers are lobbying to extend the same automatic data exchange policies imposed by foreign governments to allow third parties access to information about local residents and citizens. This would allow the government to access all information relating to citizens’ wealth, income and banking relationships. While critics and privacy advocates warn that removing bank secrecy laws will change the dynamic of the Swiss democratic system and lead to excessive government control over citizens, lobbyists cite reduced administration for tax authorities as their argument for automatic information exchange.