Voters to decide future of Swiss bank secrecy

Press, 18 May 1984, Page 12

Voters to decide future of Swiss bank secrecy

From ‘The Economist,’ London

On May 19 and 20 the voters of Switzerland will have their say on a couple of subjects that arouse much passion. Two “initiatives”— the device by which issues are referred to the whole electorate — will be coming up for their judgment.

The first, calling for stricter regulation of the banks, would punch some largish holes in the wall of Swiss banking secrecy. The second would end all sales of residential property in Switzerland to foreigners. Although neither initiative is likely to win a majority, their organisers have already brought about some of the changes they wanted. The Socialist-sponsored initiative would:

• make it possible to investigate accounts when tax evasion, in Switzerland or abroad, or breaches of currency and exchange Regulations were suspected;

• require banks to publish clear statements of their own financial dealings and positions, including information on their so-called hidden reserves;

• restrict the involvement of banks in other branches of the economy and limit the banks’ direct ownership of non-banking businesses;

• oblige banks to insure savings deposits.

Before opening any new account, a banker is now obliged to find out who the ultimate beneficiary will be. Large cash transactions can no longer be made incognito, which makes it more awkward to use Switzerland as a money laundry.

The Swiss-American treaty on mutual assistance in criminal matters came into force in 1977, and in 1983 a Swiss law extended the treaty to all other countries. A government with good reason to think that money in a secret account was stolen can ask to see

the bank’s books. The second initiative, sponsored by the Right-wing National Action Party, appeals to the mistrust of things non-Swiss that lies close under the Swiss skin. It would ban the issue of permits to foreigners to buy land for residential use, though not for commercial or industrial use. A recent spate of property scandals involving foreigners has even led some members of the Socialist Party to support the initiative. That is unlikely to win the initiative a majority. But even if it fails, the number of permits issued to foreigners will anyway be cut. Two laws have already been passed limiting property- sales to foreigners. Another, which goes into effect next January, will reduce the number of permits issued by a third from the average issued in 1980-84. Copyright—The Economist.