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Banks have written to tens of thousands of clients ordering them to “regularise” their affairs in recent years, either by proving they are tax compliant or taking their money elsewhere. Customers have withdrawn billions of francs as a result — often some of the banks’ highest-margin business.
And yet the banks are still not in the clear. In 2017 they expected challenges in exotic destinations. Switzerland has signed up to an ever-expanding list of countries whose tax authorities would automatically get information on Swiss banks’ clients. Countries such as Indonesia have worked through tax amnesties incentivising individuals to declare untaxed income.
But the problem has resurfaced on their doorstep in Europe, where clean-up work has been most intensive. Investigators descended on Credit Suisse’s offices in the Netherlands, UK and France on March 30 searching for information about “dozens of people who are suspected of tax fraud and money laundering”. Dutch prosecutors, who co-ordinated the raids, said criminal investigations had also taken place in Germany and Australia.
The authorities have so far not spelt out exactly of what they are accusing Credit Suisse. People with knowledge of the probe say that questions have centred on processes and procedures, and that Credit Suisse has not been asked to hand over any information on clients, past or present. Bankers say the probe is likely to be about clients who had money at Credit Suisse and have already taken it out as part of the SFr40bn ($40bn) of regularisation-related outflows that the bank says it has already processed.
Other large Swiss banks have been through similarly painstaking processes to weed out tax-dodging clients, but they admit they are not foolproof. “We are not the tax police, we do as much as we can do. Your question is: can somebody trick us and still have some untaxed asset with us?” a Swiss private banker said. “That’s maybe not completely impossible”.
The banker said things will actually get easier from next year, when they are automatically sending information to tax authorities. “We will have to do less due diligence [on clients’ tax status],” he said. “We just send them the data.” Julius Baer chief executive Boris Collardi said Switzerland was a “little bit ahead of the curve” when it comes to information exchange but that this was “not a bad thing. It needed to be done eventually. Let’s get it over and done with.”
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