Swiss bankers have a long reputation of being tight-lipped when it comes to divulging details about their clients’ accounts.

Over the years, however, this practice has become associated with illegal activities ranging from money laundering to tax evasion, which have tarnished Switzerland’s image, earning it the name of a ‘tax haven’ or ‘tax paradise’ where wealthy people stash their undeclared assets.

READ ALSO: Is Switzerland actually a tax haven?

However, under pressure from other countries, Switzerland adopted a tougher stance on foreign account holders in 2016, exchanging information with its foreign counterparts to ensure tax transparency.

This means that a foreign individual, whether residing in Switzerland or abroad, can no longer hide assets in a Swiss bank and hope their own country wouldn’t find out about it.

So, as far as foreigners are concerned, the days of bank secrecy are long gone.

But this practice is still intact for Swiss clients.

‘Client confidentiality’

Rather than calling this practice ‘banking secrecy’, the Swiss refer to it as ‘client confidentiality,” which has long-standing legal basis.

According to the government, this legislation “protects the financial privacy of citizens from unauthorised access by third parties or by the State.”

This is how the government explains it: “Banking secrecy arises from civil law, especially the contractual obligation of the banker to keep the personal information of his or her client confidential. The privacy of the client is also protected by the general provisions of the Swiss Civil Code concerning protection of personality and by the law on data protection. Moreover, under civil law, banking legislation considers the confidentiality of the banker to be a professional obligation, the violation of which is punishable.”

In other words, the bank not only must keep information about its Swiss accounts confidential, but could actually be punished if it divulges it.

OPINION: Switzerland’s respect for privacy has benefits but it also harms the country

Challenges to the law

Some Swiss politicians are speaking out against this long-standing practice.

“Now is the time to abolish banking secrecy in Switzerland,” according to Tobias Vögeli, president of the Young Green Liberals.

He argues that changing the law requiring banks to maintain confidentiality about their clients’ financial affairs would be “an effective instrument against tax evasion.”

His party will file a motion in the parliament to this effect in the near future.

However, this drastic change is not likely to happen — not only have some MPs already voiced their opposition to it — but the law provides for exemptions to bank secrecy.

“Numerous provisions of civil law, debt collection and bankruptcy law, criminal law, administrative criminal law, and mutual assistance in criminal matters provide for exceptions to banking secrecy,” the government says.

Accordingly, it can be lifted against the client’s will if ordered by court: “The Swiss financial center has comprehensive mechanisms at its disposal to defend against assets originating from criminal offenses. By international standards, the Swiss rules are very strict.»

In conclusion, if you are a Swiss citizen, your right to ‘financial privacy’ is guaranteed.

If, on the other hand you are a foreign national, your assets will be declared to your country of origin. 

READ ALSO: What can a Swiss bank demand of a foreign client?