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Illicit assets: Swiss govt tell banks to boost due diligence

PTI | Last Updated: Tuesday, December 3, 2013 - 18:36

Geneva/New Delhi: Switzerland has directed banks to strengthen due diligence on overseas clients to prevent illicit fund flows as well as comply with international tax regulations.

The Swiss government's direction to the banks come in the wake of the country agreeing to automatic exchange of information on tax matters with foreign countries, including India.

The government has directed banks and other financial intermediaries to comply with enhanced due diligence requirements while "accepting assets in order to prevent the inflow of untaxed assets".

Swiss banks have been perceived as safe havens for stashing away untaxed money, including by entities from India.

"Enhanced due diligence requirements should apply additionally for those states with which no such agreement exists.

"This procedure makes it possible to co-ordinate these requirements with the implementation of an automatic exchange of information," Swiss government said in a statement last week.

Shedding its veil of banking secrecy, Switzerland has agreed to be part of the global convention on tax matters formulated by Paris-based policy advisory group Organisation for Economic Cooperation and Development (OECD).

"The extended due diligence requirements are the result of the Federal Council's financial market strategy and serve to ensure a tax-compliant financial centre.

"They are to supplement the existing due diligence requirements to prevent money laundering," it said.

An internationally recognised standard for the Automatic Exchange of Information (AEI) would exist in the foreseeable future, which would enable Switzerland to conclude the agreements necessary for implementation with important partner states, it added.

Meanwhile, the Swiss Bankers Association (SBA) has suggested steps to ensure that untaxed money are not flowing into the banks in the country.

The apex grouping of Swiss banks has asked its members not to accept any assets where they know that the assets are and would remain untaxed. This would also be applicable for cross-border clients who are changing banks within Switzerland.

Further, the association has urged Swiss banks to ensure that clients are in compliance with regulatory requirements.

Swiss banks put together managed assets totalling 5.57 trillion Swiss francs (over Rs 383 lakh crore) at the end of 2012, out of which 51 percent came from abroad, after an increase of over six percent during the year.

First Published: Tuesday, December 3, 2013 - 18:36
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