Switzerland May Share Bank Information to Trace Chinese Black Money

Switzerland is no longer considered as a “tax haven”. Being the world’s largest offshore financial center, Switzerland has agreed automatically to share foreigners’ account information with other countries. Analysts say that this is good news for the other countries, however, for the Chinese Communist Party’s (CCP) corrupt officials, it seems a “thunderstorm”.

At a ministerial meeting of the Organisation for Economic Co-operation and Development (OECD) in Paris on May 6, with Switzerland joining, 47 countries have signed up to a new global standard on automatic information exchange. This is the information transparency treaty. The agreement requests each member to collect and exchange bank data, company beneficial ownership, other legal structures and more.

Switzerland will lift its centuries-old commitment to protecting the privacy of banking clients. Sources say that Swiss banks commonly use bank secrecy management. Its clients only needed to register their true identities the first time, then their accounts were assigned a code. This secrecy system has won the trust of customers. Currently, Switzerland has about US$2.2 trillion offshore assets, the largest in the world

Feng Xingyuan, Deputy Director of the Beijing Unirule Institute of Economics: “It is good and bad. For some countries if its property system isn’t good, clients using Swiss banking secrecy to protect their wealth may be a good deal. However, if the countries without a good property system, have many corrupt officials who want to hide their assets, in this case, transparency is good.”
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Swiss government says that this move shows their determination to fight tax fraud and tax evasion. Swiss Bankers Association says that “the banks in Switzerland are willing to adopt the automatic exchange of information along with other financial centres, provided that the exchanged information is only applied for tax purposes.”

Beijing News reported that although Switzerland limits the exchange data only in the tax area, it still can find some clue of corruption while investigating tax evasion.

Feng Xingyuan: “If Switzerland opens its secrecy system, it may trigger many assets to be exposed. It is good, once it is exposed, it can be traced. If it had never been exposed, it is a problem. Now because Switzerland will open the data, once it is done, it is certainly good for anti-corruption. No matter how many assets are being transferred from China, they are traceable.”

Sources say that from 2001 to 2011, US$1.8 trillion illegal funds from tax evasion, corruption and crimes were out flowed China, it accounts for one-sixth of global amounts. China is the biggest country with illegal fund outflows in the world.

WikiLeaks revealed several years ago, 5,000 CCP high-ranking officials have accounts in Swiss banks. Amongst them, two-third are officials in the central government. From CCP’s deputy premier level, presidents of the banks, to ministry level officials, almost everyone has bank accounts in Switzerland. In addition, of top level officials working in Hong Kong in the past, the majority have Swiss bank accounts. A US-based Chinese magazine China Affairs reported that former CCP leader Jiang Zemin has US$350 million deposits in a Swiss bank.

Some media exposed that Jiang Jiemin, former director of State-owned Assets Commission and chairman of China National Petroleum Co. using his power transferred benefits to Zhou Yongkang’s family. The Zhou’s made billions of dollars profit via some overseas company, then laundered money to Swiss banks.

Yang Ning, current affairs commentator says in his blog that as Swiss banks lifted their secrecy system, it brought great panic to Jiang Zemin, the Zhou Yongkang’s and other high-ranking officials.

Frank Tian Xie, Professor of the University of South Carolina Aiken: “Switzerland’s banking secrecy system is recognized by the international community. As we know, it has centuries-long history. Thus the CCP officials chose Switzerland to deposit their money. Now I am afraid that all the CCP officials will feel panic.”

Although the banking secrecy system gave Swiss banks the “most trusted” image, it has also been criticized. Professor Frank Tian Xie says that Switzerland has been forced to lift the secrecy system.

Frank Tian Xie: “Governments including the US have pressured Swiss banks for a long time. To protect clients confidential information should be considered good service, However, it becomes a money laundry haven for dictators and drug dealers. Thus Swiss banks have always been under pressure of criticism.”

Sources say that most countries considered as “tax havens” have signed the treaty this time. Only a few countries still insisted on “tax haven”status, and the OECD will likely announce them in a“black list” this year. Further pressure could be applied.