UBS deal cracks door on banking secrecy worldwide
August 20th, 2009
Christian Science Monitor
Wednesday’s agreement by Swiss bank UBS to divulge details of 4,450 accounts to the US Internal Revenue Service has put a crowbar into the door of Switzerland’s long tradition of bank secrecy. But it’s just a small opening. The amount of global wealth stashed in tax-haven nations is staggering and largely uncontrolled, financial experts say. Here’s a brief backgrounder:
How did Switzerland become bank-secrecy central?
Maintaining a strong record of client confidentiality helped to pave Switzerland’s way to financial success, becoming a lure for financial assets. Coupled with the Swiss franc’s reputation as a reliably firm currency, this has made Zurich a world banking center – with UBS and Credit Suisse among the best-known firms. The tradition of secrecy gained a firm legal rooting in 1934, as part of broader Depression-era bank regulations. Under the provision on secrecy, bankers could face criminal sentences for divulging client information.