Swiss bank secrecy
"The bank customer has the right to protection of its economic privacy, the bank therefore has to maintain confidentiality of all facts related to their customers."
Definition of the Swiss bank secrecy by the Swiss Bankers Association
The Swiss Bank Secrecy
The Swiss bank secrecy or bank customer’s secrecy is a legal obligation for Swiss banks and financial institutes to preserve and ensure the economic privacy of their clients against third parties. Swiss banks are obligated to not disclose any customer-related bank information.
“The bank customer has the right to protection of its economic privacy, the Swiss banks therefore have the duty to maintain confidentiality of all facts related to their customers.”
This is how the Swiss Bankers Association defines the Swiss bank secrecy. The bank secrecy is a professional secret, which not only employees of the banks are subject to, but also organs, officers or liquidators of a bank, investigations and remediation delegated of the Banking Commission as well as organs or employees of recognized audit divisions.
The Swiss bank secrecy is based on a centuries-old culture of confidentiality in commercial affairs by private banks. In Switzerland it was formally established by the enactment of the Swiss Banking Act in 1935. The Swiss Banking Act became necessary after the governmental rescue of the Swiss Credit Union in December 1933, when the Swiss banking system had to be exposed to greater state control due to public pressure.
During World War I many wealthy foreigners brought their money to Switzerland since the political stability was no longer guaranteed in other countries. During the Great Depression the surrounding states began with foreign exchange controls. These states wanted to know whether their citizens have great assets in Switzerland. Germany and France began to make greater efforts to prevent capital flight. However, Swiss banks denied to provide information about their clients and whose assets. Therefore, 1932 a Swiss bank director who carried a client list with him was arrested in Paris. Thereby a comprehensive list of French investors in Switzerland became common which caused a scandal in France. The list contained many famous French, such as the Peugeot family. This incident caused a law extension, which set the disclosing of customer data in Switzerland as a criminal offense.
The “Federal Law on Banks and Thrift Institutions”, which contains the Swiss bank secrecy, entered into force 1935. Thereby Switzerland indicated that confidentiality can be expected in the future as well.
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