Do Swiss bankers really want automatic information exchange

Last week we wrote a blog entitled Swiss Bankers Favor Automatic Information Exchange? which noted that the President of the Swiss Private Bankers Association (SPBA,) Nicolas Pictet, was advocating automatic information exchange. How sincere is he? Mark Herkenrath of Alliance Sud in Switzerland fills in some important details:

Over the last days, the president of the Swiss Private Bankers Association, Nicolas Pictet, has repeatedly been quoted as being in favor of automatic information exchange (see TJN Blog; Tax Research; Tax News). Unfortunately, these wonderful news are only partially true.

Pictet wants Switzerland to establish automatic information exchange (AIE) only with a handful of (rich) countries. Moreover, he is in favor of AIE only under the condition that there is increased transparency with regard to discretionary trusts, foundations and Anstalten. And he wants Switzerland to negotiate AIE only in return for increased market access for Swiss banks.

Here is my translation of the relevant parts in the original interview in German-language Swiss newspaper Tages Anzeiger:

"What rules to check the tax conformity [of incoming assets] should Switzerland apply with regard to emerging market countries?

It would be wrong to treat bank customers from all over the world in exactly the same way. Unfortunately, many countries do not provide the kind of legal protection of property rights and juridical norms that we are used to. Customers from such countries deposit their money in Switzerland for safety reasons, not because they want to evade taxes...

"... out of fear of expropriation, political repression and extortion? There are also cases in which personal safety is concerned.

"That is, Switzerland should agree automatic information exchange with Europe, but not with, for instance, Asian and Arabic countries? 

Exactly. Under clearly defined conditions--regulations regarding the settlement of the past; market access--automatic information exchange with some countries is conceivable, but not with the whole world. And the principle of a 'level playing field' must be applied with regard to all countries that have similar legal orders and with regard to all kinds of circumstances--including trusts."                                                                                                                                           

 In short, Pictet does not want Switzerland to establish automatic information exchange with emerging market and developing countries. Nor does he want any other kind of regulations regarding the inflow of undeclared assets from the global South.

That is, the Swiss banks' business with tax evaders from developing countries shall go on! Recent figures show that the share of assets under management by Swiss banks that stem from Asian and African countries is growing at unprecedented pace.