Banking Secrecy and Its End

How Swiss banking secrecy, formalised in 1934, attracted wealth from around the world, and how US pressure and global tax transparency ended it after 2008.

Switzerland was famous for banking secrecy.

The 1934 law

The Banking Act of 1934 made it a crime for bankers to reveal client information.
Switzerland attracted foreign wealth, including some hidden from tax authorities.

Criticism

Swiss accounts were used for tax evasion and sometimes by dictators.
Nazi-era dormant accounts led to a settlement with Holocaust survivors in 1998.

The end of secrecy

In 2009, UBS paid a large penalty to the US and handed over client names after helping Americans evade taxes.
Switzerland agreed to automatic exchange of information under OECD standards from 2017-18.

India’s interest

Switzerland shares account information with India under automatic exchange since 2019.
Debates about “black money” in Swiss banks were part of Indian politics.

Today

Swiss banks still manage huge amounts of wealth, but secrecy for tax evasion has largely ended.

The data exchange

Each year, Switzerland sends India information about accounts held by Indian residents in Swiss banks.

Thinking Swiss accounts are still secret from tax authorities

Automatic information exchange ended most secrecy.

Key takeaways

The 1934 Banking Act created strict secrecy.
Secrecy attracted wealth, including tax evasion.
UBS's 2009 US case began the end of secrecy.
Switzerland shares account data with India since 2019.