Offshore Banking Jurisdictions

Offshore Banking in Switzerland

Swiss banking system is characterized by privacy, stability and protection of clients' assets and information. Offshore banking traditions and banking secrecy are many hundred years old. It is estimated that at the current moment 1/3 of offshore funds worldwide is kept on offshore accounts in Switzerland. Perhaps, Switzerland has the biggest number of banks per capita, and many of these banks provide offshore banking services.

All banks in Switzerland are regulated by the Federal Banking Commission. The Swiss Parliament passed the Banking Law of 1934, which codified the rules of secrecy and criminalized violation of it.

When opening the offshore bank account in Switzerland it is important to understand if you qualify for private banking services, or you should look for swiss bank providing retail banking services. For private banking customers, the level of service will be much more personal than in mass-market retail banking. This is historically exclusive service that has been reserved for those with liquid assets measured in millions. Many private banks require from new customers a special invitation or referral by current customer, and actually they are focusing on providing private consultations in certain aspects of wealth management including investments, tax concerns, and estate planning.

All Swiss banks that provide offshore banking services, as a rule, are divided into certain groups:

  • Big banks accounting for over 50% of all deposits in Switzerland (UBS and Credit Suisse);
  • The banks that belong to Swiss Private Bankers Association. These banks have the legal form of individually owned firms, collective and limited partnerships, private bankers are subject to unlimited liability with their personal assets;
  • Commercial and Investment banks, specializing mostly in security tranwsactions and wealth management, mostly Swiss and incorporated under Swiss law;
  • Foreign-controlled banks, originating predominantly from EU (50%) and Japan (about 20%); most areas of activity are investment banking (share of foreign asstes in the balance sheet total is 70%) and asset management. In case of asset management, the clients are usually foreign;
  • Branches of foreign banks - international banks focused in their operations, mostly in the field of investment banking and asset management, particularly on the country of origin;
  • The banks specializing in securities and asset management business. The banks of this category have the legal status of private joint-stock companies, and are operating internationally, serving clients both inside and outside Switzerland.

Switzerland is also famous for its numbered accounts. These are not anonymous offshore accounts, but personal offshore accounts where account title is not the owner's personal name, but some combination of numbers and letters. The due diligence requirements for such offshore account are even more strict than for "normal" offshore bank account, however information about account holder's identity is restricted to senior bank officers only.

Now some words about the privacy of Swiss offshore bank accounts:

Private citizens or their legal representatives cannot receive any type of information about anyone's Swiss bank account under any set of conditions. This works for all types of legal proceedings that are classified as "non-criminal behavior". Divorce and inheritance disputes as well as bankruptcy cases are considered to be such "private matters", and as such the secrecy of the account is protected from any legal action to verify the presence of, or attempts to seize any assets.

The exceptions are three types of activity which are considered to be illegal in Switzerland: organized crime activities, drug trafficking, and "insider trading" of securities. In these cases, Swiss authorities solve in the individual order if this information can be revealed.