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Bank customer confidentiality
Right of privacy
Since bank customers have a right to privacy concerning their personal financial affairs,
banks have a duty to keep confidential all facts that involve their customers. This right
of the customer and corresponding obligation on the part of the bank is called bank
customer secrecy. However, confidentiality is not, and has never been, absolute because it
does not protect criminals. In fact, banks provide information to domestic and foreign
legal authorities in accordance with procedures clearly stipulated by law.
Nevertheless, adherence to this basic principle and the features of the statutorily
regulated disclosure obligations are of great importance to Swiss banks. Swiss banks
consider it to be of paramount importance for their financial centre to be free of
criminal activity. Like their customers, they have no desire to work with criminals.
Bank customer confidentiality is one benefit offered by the Swiss financial centre, but is
by no means the only one. Switzerland's attractiveness as a financial centre is enhanced
by factors such as above-average performance, high-quality service, cost transparency and
good value.
Legal basis
Bank customer confidentiality is embodied by Article 47 of the Federal Law on Banks and
Savings Banks, enacted on 8 November 1934. This article prohibits anyone who functions as
an officer, employee, mandatory, liquidator or commissioner of a bank, as a representative
of the Federal Banking Commission, or as an officer or employee of a recognized auditing
company, from disclosing any information that a bank customer entrusts to them in this
capacity. Although the law speaks of "bank confidentiality", the term "bank
customer confidentiality" is really more accurate since it concerns a right of bank
customers.
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Purpose of legal regulation
- To protect the bank customer's privacy with respect to financial affairs
- To protect customers - not banks (for this reason, as indicated previously, "bank
customer confidentiality" is a more accurate definition than the previously used
"bank confidentiality")
- To protect a customer's civil rights under the Swiss Civil Code, similar to the
protection afforded a doctor or lawyer
- To offer no protection for criminals
Consequences of violating bank customer confidentiality
Anyone violating bank customer confidentiality, or who tries to induce others to violate
it, faces imprisonment for not more that six months or a fine of not more than SFr.
50,000. If the violation has been committed by negligence, the penalty is a fine not
exceeding SFr. 30,000. The violation of bank customer confidentiality remains punishable
even after the termination of the official or employment relationship or the exercise of
the profession (Art. 47, Federal Law on Banks and Savings Banks).
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When bank customer confidentiality is waived
- Bank customer confidentiality is not and has never been absolute.
- Exceptions are legally regulated.
- Information must be disclosed by the banks in the following situations:
- in criminal investigations (suspicion of money laundering,
membership of a criminal
organization, theft, tax fraud,
blackmail etc.);
- when providing international legal
assistance (criminal
investigations conducted
abroad);
- in bankruptcy proceedings; or
- in civil proceedings (inheritance
and divorce, for example).
When bank customer confidentiality is not waived
- In cases of tax evasion (the Swiss tax system is based on the principle of
self-declaration).
- As an impediment to tax evasion (tax at source is the highest in Europe at 35%).
Numbered accounts are not anonymous!
Contrary to what countless thrillers would have us believe, there is no such thing as
anonymous account in Switzerland. Bank customers must identify themselves when opening a
numbered account, and even these accounts are subject to disclosure when criminal
investigations are involved.
Conclusions
- The underlying principle of bank customer confidentiality remains inviolate. It is and
will remain a part of the service provided to customers.
- It does not shield to criminal activity. The Swiss Penal Code has been tightened
accordingly, especially with respect to the fight against organized crime.
- Swiss banks have every interest in ensuring that their financial centre remains clean.
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