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Reader question: Can I open a Swiss bank account from abroad?

A number of misconceptions surround Switzerland’s banks, including how easy / difficult it is to open an account. Here’s the information you can… bank on.

Reader question: Can I open a Swiss bank account from abroad?

There are many reasons why people who live abroad may want to open a bank account here — for instance, they are relocating to Switzerland, or travel here often, or want the stability of the country’s financial sector, or maybe they just like to brag at parties about having money in a Swiss bank.

Gold, secrecy and wealth: Six Swiss bank myths that need to be busted

But can foreigners actually open an account here and if so, how do they go about it?

Depending on your circumstances, the process can be either quite complex or relatively easy.

What you need to know

Despite what you may have heard, you don’t have to be a millionaire to open an account in Switzerland — though banks would certainly prefer you were.

OVERVIEW: How to open a bank account in Switzerland

And also contrary to any pre-conceived ideas you may have, you can’t open an “anonymous”  account where you can park your undeclared money to evade taxes.

In fact, if you want to place your money in Switzerland, you will have to go through a rigorous vetting process, especially if you live abroad.

That’s because in order to shed its long-held image as safekeepers of illicit  or hidden assets, the banks have cleaned up their act over the past decades, choosing transparency over opaqueness.

This is what you need to email to the bank to set up an account in Switzerland from abroad.

  • Authenticated (notorised) proof of your identity, such as a valid passport, along with your address abroad.
  • Document(s) showing the legal source of your funds. A typical proof that your money comes from legitimate sources could be a statement from a bank in your country showing salary payments or documents from the sale of property.

But even if you provide all the required documents, banks have the right to turn you away.

For example, according to Swiss Banking Association, an umbrella organisation for Switzerland’s financial sector, “a bank might refuse to enter into a business relationship with a politically exposed person. It may also reject a prospective customer if it has doubts about the origins of that person’s funds”.  

READ MORE: Which bank is best for Americans in Switzerland?

There are also other factors to consider before you decide to place your money in Switzerland.

Though you may have heard about the legendary Swiss bank secrecy, there are specific instances when this confidentiality can be broken.

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 foreigners in Switzerland?

So, if you are a foreign resident (or even a foreign national living in Switzerland),  under the terms of the agreement the government of your country can request Switzerland to release your account(s) information and Switzerland must comply.

Also, additional hurdles are in place for people living in the United States.

To prevent its residents from stashing their money in offshore accounts in order to evade taxes, US regulations require foreign banks to report to US tax authorities (IRS) all the assets that belong to US citizens – whether living in America or abroad.

Swiss banks are reluctantly complying with the rules because failure to do so can seriously impact their ability to do business in America.

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OPINION: Why Switzerland needs to scrap its fabled 1,000 franc notes

If the Americans can get by with $100 bills, the British manage with £50 and EU citizens now mostly €200, why do the Swiss need such a large denomination? The answer is, they don’t, writes Clare O'Dea, as she explains why it should be binned.

OPINION: Why Switzerland needs to scrap its fabled 1,000 franc notes

The existence of the 1,000-franc note, so blatantly open to misuse, is justified with platitudes about the Swiss liking cash.

Apparently the 1,000-franc note is quite pretty but I can’t say for sure as I’ve never seen or touched one. With the exception of Singapore and Brunei, no other country sees fit to issue such a large-denomination note for the simple reason that it’s not needed for legitimate business.

Financial secrecy is obviously a big part of the appeal of the 1,000-franc note. To say otherwise is not really credible. Cash in this condensed form is anonymous, untraceable, easily transportable, easily concealed.

As Bradley Birkenfeld said in a 2015 CNBC interview, “I mean you could put half a million in your pocket, no problem”. Remember that name? Birkenfeld was the (in)famous UBS whistleblower who exposed the bank’s shady practices to the US authorities in 2007, triggering the dismantling of Swiss banking secrecy.

The Swiss National Bank (SNB) explains that the big note is used as a “store of value” to a considerable degree. What does that mean? The SNB’s own research shows that most people keep less than 1,000 francs in cash at home. Are we talking about storing value under the mattress or in a safe deposit box?  Who does that and for what reason?

Look, I’m sure there are people with 1,000 notes squirrelled around the place who run their finances in a totally clean and honest way. The latest SNB survey on payment methods found that half of the population had been in possession of at least one 1,000-franc note over the previous two years. The note is especially popular among men over the age of 55

But inevitably there are tax evaders, money launderers and other criminals who find the big notes come in very handy. The €500 note was scrapped after 17 years mainly because of its popularity with criminal gangs in the EU and beyond, to the extent that it had become an embarrassment.

The €500 note is still legal tender but no new notes have been issued in the euro zone since 2019, following the decision by the European Central Bank. The move came after serious concerns were expressed by academics, international police agencies and EU finance ministers.

When production of the €500 note officially ceased, the largest denomination note accounted for 20 per cent of the value of all euro notes in circulation. Doesn’t it seem odd that 60 per cent of the value of all francs in circulation are in 1,000-franc notes? That’s 9.4 per cent of all physical notes. Something doesn’t add up.

I have heard people argue that 1,000-franc notes are popular for big expenses, like buying a car or jewellery. Or for paying big bills over the counter at the post office (this I have seen). Rumour has it that farmers like to buy livestock with the purple polymer and paper mix. Each to his own.

But these financial practices are fast becoming dated and are anyway not common enough to explain the volume of 1,000 notes in circulation. Yes, it’s official: cash is no longer king in Switzerland.

As recently as 2017, some 70 per cent of non-recurring payments were made in cash, purchases like clothes, the supermarket shopping, or restaurant meals, according to the SNB survey on payment methods. This had reduced to 43 per cent by 2020, the last time the survey was carried out.

The most recent data on payment behaviour comes from the Swiss Payment Monitor, a joint research project between the University of St. Gallen and the ZHAW Zurich University of Applied Sciences, which reported in August of this year.

The study found that the debit card remains the most frequently used form of payment for face-to-face business (34.8 per cent), followed by cash (33.2). Credit cards are less popular at 16.5 per cent. Meanwhile mobile payments are growing in popularity, increasing share from 1.5 per cent of transactions to 11.2 per cent over the past five years. 

What this boils down to is that people are perfectly adept at paying electronically in all kinds of ways and the role of the 1,000-note in retail or person-to-person purchases is far from essential.

While we’re on the subject of money, this month saw the release of the Credit Suisse Global Wealth Report, in which Switzerland emerged as the world’s richest country. The average wealth of adult residents in this country is 672,508 francs, up 5.4 per cent from the previous year. Assets include stocks and shares, pensions savings, and property.

In case you’re feeling left out, the median wealth per adult in Switzerland is 165,266 francs. That means half of the population possesses less than this amount. The figures are skewed upwards by a smallish number of mega rich individuals, with a little help from the 1.1 million millionaires in Switzerland. My guess is that these two groups have the most use for the 1,000-franc notes.

Reading between the lines, I sense some national pride in the attachment to this world-beating high denomination note. Swiss people like to hold cash – that’s our way. We also like our privacy – so what!

Not to spoil the fun, but all cultures need to be aware that just because they’ve always done something a certain way does not mean the practice has merit and is worth preserving. I recommend taking a long, hard look at the legitimacy of the fabled 1,000-franc note.