Swiss gold exports to India cross CHF 11-bn; banks turn wary

As banks in Switzerland come under greater black money scrutiny, the quantum of gold having left Swiss shores for India so far this year has reached a record high level of over 11 billion Swiss francs (about Rs 70,000 crore).
The gold exports from Switzerland to India stood at over 2.2 billion Swiss francs (about Rs 15,000 crore) in September alone, which is double the figure for the previous month, shows latest data released by Swiss Customs Administration.
As a result, the total Swiss gold exports to India since January this year has grown to 11.4 billion Swiss francs, shows the data compiled by the Swiss government's cross-border trade monitoring agency.

While industry watchers attribute the surge during September partly to increased demand for the yellow metal ahead of Diwali and other festivals in India, the sudden spike is also being seen suspiciously in the backdrop of gold being used for 'layering' purposes to move funds from Swiss banks amid growing scrutiny for suspected black money.
According to banking industry sources, banks operating in Switzerland, including those headquartered in the Alpine nation and the Swiss units of other European banks, have turned wary about dealing with their Indian clients in the wake of a growing scrutiny of such accounts.
A number of Swiss banks, including three with significant global presence, have begun telling their Indian clients to sign undertakings that are aimed at 'derisking' the banking institutions from potential risks arising out of regulatory actions against the bank customers by foreign governments.

Some banks are also telling their clients to close their accounts if they are not ready to take such risks, or if they have apprehensions about such accounts not being compliant to regulatory requirements in their home countries.

Through these 'derisking' undertakings, the customer agrees to take responsibility for any possible regulatory or administrative compliance with international norms.
At the same time, the bankers are also lobbying with the Swiss government to ensure that any information would be shared with their Indian counterpart about accounts held in Swiss banks only after necessary provisions are made to safeguard the interest of the concerned banking institution.

Following a high-level delegation visit from India, Switzerland recently agreed to cooperate on matters related to verification of genuineness of accounts and reply to requests for banking account details in a time-bound manner, and also to initiate a process to include India among the countries eligible for 'automatic exchange of information'.
While banks try to put in place necessary safeguards, there are apprehensions that many of their clients are being advised to move the funds through gold and other routes.