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Swiss Banking Secrecy Nears End

Financial information on Swiss bank accounts held by citizens of certain countries will in future be shared annually and on an automatic basis
The Zurich-based division of Credit Agricole–which is due to pay the lion share of $99.2 million–has managed over 950 US-related  accounts valued at over $1.8 billion since 2008. The Zurich-based division of Credit Agricole–which is due to pay the lion share of $99.2 million–has managed over 950 US-related  accounts valued at over $1.8 billion since 2008.

Switzerland's reputation as a secretive tax haven looks set to end following the introduction of rules over sharing bank account data.

The International Convention on the Automatic Exchange of Banking Information entered into force on January 1, pulling Switzerland in to line with international standards on taxation, CNBC reported.

The convention, developed by the Organization for Economic Cooperation and Development and the global financial industry, states that financial information on Swiss bank accounts held by citizens of certain countries will in future be shared annually and on an automatic basis.

In the past, Switzerland would only provide banking information if requested by a limited number of countries and even then, full cooperation was not guaranteed.

The regime came under international pressure in 2008 after the US Federal Bureau of Investigation probed a multi-billion dollar tax evasion case involving the Swiss bank, UBS.

According to the Swiss State Secretariat for International Financial Matters, Switzerland will now start collecting data starting January 1, 2017 and exchange it for the first time in 2018.

The secretariat said the new standard makes provision for the mutual exchange of information. So Swiss institutions will now also receive yearly updates on the bank account details held by its citizens in other countries.

"Aside from Switzerland, almost 100 states, including all major financial centers, have declared their intention to adopt the standard," the Swiss secretariat said on its website.

The Swiss parliament approved the deal in 2015 and the treaty was ratified in 2016.

Banks Penalized

Three Swiss banks have come under fire from the US Justice Department for helping American citizens to evade taxes. On December 15, it was announced that Credit Agricole, Dreyfus Sons & Co and Banquiers have been charged with a total fine of $130 million in order to avoid prosecution, Europeanceo reported.

The three banks reached a settlement with the Justice Department under a program launched two years ago to disclose activities that have helped US account holders to conceal their assets in Switzerland. As such, the institutions had to each hand over detailed information about individuals under investigation by the Internal Revenue Service.

According to information published by Reuters, the Zurich-based division of Credit Agricole–which is due to pay the lion share of $99.2 million–has managed over 950 US-related accounts valued at over $1.8 billion since 2008.

Dreyfus Sons & Co and Banquiers on the other hand were found responsible for establishing overseas entities that held funds and concealed the identity of account holders from the IRS. It was also revealed that Dreyfus Sons & Co, which is due to pay $24.2 million, stored cash and gold in areas of its vaults that had been purposefully segregated.

The three institutions are not alone in receiving penalties from the IRS, as 64 other Swiss banks have also been charged last year alone–amounting to a total of $742 million.

Dormant for 70 Years

Swiss banks recently published a list of the holders of dormant accounts that have not been used since 1956 in an attempt to find their heirs, al-Arabiya reported.

It has become mandatory for banks to do this since the passing of new regulations in 2015 that addressed the issue of dormant accounts. The list released in November is the second since the start of 2015.

The accounts on the list have at least 500 Swiss francs ($526) each and have remained unclaimed for at least 60 years now.

The list included the names, birth places and nationalities of around 300 account holders. The total number of their assets is eight million Swiss francs.

The bank will publish such lists every year. In 2017, they will publish a list of card holders who haven’t claimed their accounts since 1957 while in 2018 they will publish a list of those who haven’t used their accounts since 1958 and so on.

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