Why do millionaires save their money in Swiss banks? | Instant News


Swiss banks have a reputation for anonymity and security and despite the fact that much of the tightness around the Swiss banking system has been diluted. Even so, Swiss banks tend to have an aura of secrecy that makes them seem mysterious to people who are not in the financial sector and often the narratives around Swiss bank accounts serve as political tools against the government which ministers accused by ministers hide uncountable money in a secret Swiss bank account. Which raises the question:

Is saving money in a Swiss bank illegal?

Asking for this is like asking whether it is illegal to save money in, say, HDFC Bank or the State Bank of India. The act of depositing money in any bank, Switzerland or other, is not illegal in itself. Swiss banks, due to the legal nature of their countries used to maintain the confidentiality of details of their account holders, make it a clear choice to hide untold wealth.

How can Swiss banks become a refuge for undeclared money?

“Although banking began in Italy, it is Switzerland that defines what modern banking is today,” said Ashish Shanker, Head – Investment in Motilal Oswal, who also works for Sarasin, a Swiss bank born in 1841 who briefly runs operations in India. “From numbered accounts to secret safes and advanced technology – Switzerland is responsible for introducing all this and more to the banking sector.”

Of course, it helps that Switzerland has traditionally been a banker, first for the rich, famous and who doubted Europe for centuries and America for decades. All of this demands that they stay ahead of the game, not only with technology and processes but also legally. “The cantons were once safe guardians of the rich in Europe long before they joined to become Switzerland now.

“For the most part, Switzerland remains neutral and away from all conflicts including the two World Wars. Combined with their banking heritage, Switzerland is fast becoming a world banker. The emperors, dictators, leaders and businessmen of the Axis and Allied powers kept their money in Switzerland. Mountain area in Switzerland also makes it easy for Switzerland to make super-sized secret vaults.

“They also put in place a high-tech process that ensures the anonymity of their clients. The only people who will have access to the client’s identity are private bankers and a number of other high-ranking managers, making all operations very confidential. For centuries, Swiss law has also been designed in such a way that it is almost impossible to know whether someone has an account at a Swiss bank, let alone find out the details. And the difference drawn by Swiss people between tax avoidance and tax fraud makes it even more difficult for governments to pursue criminals. “

Are Swiss banks still as secret as they used to be?

The short answer to this is no, they don’t. For decades, various countries, especially the US, have been chasing Swiss banks to disclose details of their account holders. The American war against Swiss banks began in the 70s when the government tried to strangle the funding of drug cartels. “This resulted in Swiss banks agreeing not to accept drug money or crime,” Ashish said. “Things got hotter after 9/11 after WE make banks to disclose accounts related to alleged terror activities. “

Today, it is safe to say that the era of secrecy has ended. In October 2018, the Swiss Federal Tax Administration (FTA) began to share information about people who have accounts in their banks with their respective countries. Arrangements involving the FTA automatically share information such as the name of the owner, address, country of residence, account balance, and other details allowing the authorities of each country to check whether their taxpayers have announced their foreign financial accounts.

The list of countries where Switzerland provides this data includes India, which receives financial account information that Indians have in Switzerland for 2018 and subsequent years, automatically.

So why do people have Swiss bank accounts?

The catch here is that Switzerland has agreed to declare information on entities that are account holders from 2018 and the following years … but not the previous years. Hypothetically, if you had a Swiss bank account before 2018, and had access to smart lawyers and accountants, you could divert your money back in such a way that your exposure to banks (and therefore your government) is limited. The secrecy of a Swiss bank may not help you stay fully protected from taxes today, but it can serve as privacy and protection of assets.

It is also important to know that not all wealth in Swiss banks comes from drug lords or dictators. Legitimate entrepreneurs also tend to hide a portion of their wealth in Swiss banks to protect themselves from, say, lawsuits, coups or even something personal like a hefty divorce settlement.

Due to the stable nature of the Swiss economy, money deposited in Swiss banks also tends to remain safe and immune from most global disasters. Just think of a Swiss bank account because you will see government saving funds; they don’t always give you a large return but guarantee you that your money is safe.

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