Gold, secrecy and wealth: Six Swiss bank myths that need to be busted
In popular culture, Swiss banks are often synonymous with dirty money, illicit dealings and gold. But how true are these rumours?
Such images are often perpetuated by Hollywood films, in which shady characters invariably have a banker in Zurich — an equally shady individual with a thin moustache and a dark suit — who quietly stashes illegally begotten money in secret accounts.
These are some other common myths circulating about Switzerland’s financial institutions.
Swiss banks are only for the wealthy
This story tells it all: A man carrying a big bag walks into a Swiss bank. He goes up to the window and whispers to the teller: “I have one million francs in this bag.”
The teller says: “There’s no need to whisper, sir. Poverty is nothing to be ashamed of.”
While this is obviously a joke, it does reflect a certain reality: many people living abroad believe only the super rich can have a bank account in Switzerland.
Not so: the deposit amount varies for each of the more than 400 banks in Switzerland but even a modest sum could suffice. However, if the deposit is under a certain amount, the bank could charge administrative fees.
Typically, an account with one of the larger banks in Switzerland will set you back around 5 francs per month in account-keeping fees.
Unlike in some other countries, however, this will not include many associated transactions – like having credit or debit cards or using ATMs from non-affiliated banks.
For an all-inclusive deal, you might need to upgrade to a ‘premium account’ – which will cost around 30 francs and will cover most usual transactions and withdrawals.
READ MORE: How to open a bank account in Switzerland
You can stash the money in an “anonymous” account
This too can be attributed to Hollywood imagination.
While this may have been the case decades ago, it is illegal now. To open an account, you must have a valid ID like a passport, verification of your address, and a document to prove the origin of the money.
EXPLAINED: The best way to save money for your children in Switzerland
The latter condition is due to the fact that banks in Switzerland are not allowed to accept funds which they know or suspect have been obtained through criminal activities.
A typical proof that your money comes from legitimate sources could be a bank statement showing salary payments or documents from the sale of property.
Banking secrecy is alive and well in Switzerland
This ‘myth’ has some truth to it — for instance, in principle the banks can’t reveal your financial information to a third party. So the bank-client confidentiality is still (mostly) the rule.
However, there are some exceptions, as in order to prevent tax evasion, Switzerland has signed agreements with a number of countries to cooperate in exchange of financial information of their respective citizens.
EXPLAINED: Which banks are best for Americans in Switzerland?
In other words, if you are a foreign national, under the terms of the agreement the government of your country can request Switzerland to release your account(s) information and Switzerland must comply.
Switzerland’s banks are corrupt
It is true that in years past, some banks were involved in not-so-clean deals. However, this started to change in 1998, when the Swiss began to clean up their act, at least in part due to international pressure.
Legislation passed that year made money laundering illegal, while other laws require that any suspicious deposits be reported to the authorities.
Then, in 2011, another law was passed, allowing the government to confiscate funds deposited in Switzerland by plundering dictators and return the money to the country of origin.
Switzerland is a tax haven
This is not a total myth since (as mentioned above) Swiss banks were actively involved in hiding money.
In one very loud scandal in 2009, UBS was caught helping wealthy Americans stash $20 billion in undisclosed offshore accounts.
More recently, the Panama Papers scandal revealed the role some Swiss banks played in helping clients hide financial assets.
Because of these actions, the EU placed the country on its list of tax havens in 2017.
ANALYSIS: Is Switzerland actually a tax haven?
Two years later, however, Switzerland was removed from the list because Swiss voters accepted a legislation introducing major changes in the Swiss tax system by ending some preferential tax schemes and replacing them with new regulations which are in line with international standards.
Gold is stored under Zurich’s Bahnhofstrasse
The headquarters of several Swiss banks are located on the storied street, one of the world’s wealthiest.
But are its streets really lined with gold?
It may be partially true, as bullions could conceivably be kept in underground vaults. But that is one thing that should probably be chalked up to bank secrecy.
READ MORE: EXPLAINED: Which banks are best for foreigners in Switzerland?
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Such images are often perpetuated by Hollywood films, in which shady characters invariably have a banker in Zurich — an equally shady individual with a thin moustache and a dark suit — who quietly stashes illegally begotten money in secret accounts.
These are some other common myths circulating about Switzerland’s financial institutions.
Swiss banks are only for the wealthy
This story tells it all: A man carrying a big bag walks into a Swiss bank. He goes up to the window and whispers to the teller: “I have one million francs in this bag.”
The teller says: “There’s no need to whisper, sir. Poverty is nothing to be ashamed of.”
While this is obviously a joke, it does reflect a certain reality: many people living abroad believe only the super rich can have a bank account in Switzerland.
Not so: the deposit amount varies for each of the more than 400 banks in Switzerland but even a modest sum could suffice. However, if the deposit is under a certain amount, the bank could charge administrative fees.
Typically, an account with one of the larger banks in Switzerland will set you back around 5 francs per month in account-keeping fees.
Unlike in some other countries, however, this will not include many associated transactions – like having credit or debit cards or using ATMs from non-affiliated banks.
For an all-inclusive deal, you might need to upgrade to a ‘premium account’ – which will cost around 30 francs and will cover most usual transactions and withdrawals.
READ MORE: How to open a bank account in Switzerland
You can stash the money in an “anonymous” account
This too can be attributed to Hollywood imagination.
While this may have been the case decades ago, it is illegal now. To open an account, you must have a valid ID like a passport, verification of your address, and a document to prove the origin of the money.
EXPLAINED: The best way to save money for your children in Switzerland
The latter condition is due to the fact that banks in Switzerland are not allowed to accept funds which they know or suspect have been obtained through criminal activities.
A typical proof that your money comes from legitimate sources could be a bank statement showing salary payments or documents from the sale of property.
Banking secrecy is alive and well in Switzerland
This ‘myth’ has some truth to it — for instance, in principle the banks can’t reveal your financial information to a third party. So the bank-client confidentiality is still (mostly) the rule.
However, there are some exceptions, as in order to prevent tax evasion, Switzerland has signed agreements with a number of countries to cooperate in exchange of financial information of their respective citizens.
EXPLAINED: Which banks are best for Americans in Switzerland?
In other words, if you are a foreign national, under the terms of the agreement the government of your country can request Switzerland to release your account(s) information and Switzerland must comply.
Switzerland’s banks are corrupt
It is true that in years past, some banks were involved in not-so-clean deals. However, this started to change in 1998, when the Swiss began to clean up their act, at least in part due to international pressure.
Legislation passed that year made money laundering illegal, while other laws require that any suspicious deposits be reported to the authorities.
Then, in 2011, another law was passed, allowing the government to confiscate funds deposited in Switzerland by plundering dictators and return the money to the country of origin.
Switzerland is a tax haven
This is not a total myth since (as mentioned above) Swiss banks were actively involved in hiding money.
In one very loud scandal in 2009, UBS was caught helping wealthy Americans stash $20 billion in undisclosed offshore accounts.
More recently, the Panama Papers scandal revealed the role some Swiss banks played in helping clients hide financial assets.
Because of these actions, the EU placed the country on its list of tax havens in 2017.
ANALYSIS: Is Switzerland actually a tax haven?
Two years later, however, Switzerland was removed from the list because Swiss voters accepted a legislation introducing major changes in the Swiss tax system by ending some preferential tax schemes and replacing them with new regulations which are in line with international standards.
Gold is stored under Zurich’s Bahnhofstrasse
The headquarters of several Swiss banks are located on the storied street, one of the world’s wealthiest.
But are its streets really lined with gold?
It may be partially true, as bullions could conceivably be kept in underground vaults. But that is one thing that should probably be chalked up to bank secrecy.
READ MORE: EXPLAINED: Which banks are best for foreigners in Switzerland?
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