Swiss signs automatic information exchange pact with EU

In a major step towards shedding its long-held banking secrecy tag, Switzerland today signed an agreement for Automatic Exchange of Information (AEOI) with European Union, while similar pacts may follow with other jurisdictions, including India, to check the black money menace.

This is the first AEOI pact entered into by Switzerland, which has been facing intense global pressure to clamp down on its famed banking secrecy walls amid concerns that banks in the Alpine nation have been used for many years to stash allegedly ill-gotten and illicit wealth.

The Federal Council, the apex decision making body of Switzerland, said in a statement that it initiated today the consultation on the AEOI agreement with the EU and an agreement was also signed this morning in Brussels.

"Switzerland and the 28 EU member states intend to collect account data from 2017 onward and exchange it from 2018 once the necessary legal basis has been created," the statement said.

Nearly 100 countries, including India, have already agreed to be part of a global AEOI framework, while bilateral pacts would need to be entered into for bringing into effect such an information exchange mechanism.

An agreement in this regard between India and Switzerland is likely to be signed soon to facilitate automatic exchange of banking and other information in tax cases from 2017-2018, after completion of all legal and parliamentary procedures in the two countries.

Indian Finance Minister Arun Jaitley had yesterday said that the era of tax havens has come to an end and it is no longer safe to keep assets abroad illegally.

He had further said that the world is increasingly moving towards automatic transmission of information with regard to illegal money held up and a situation would arise by 2017 that India will be able to get information in real time from foreign countries like Switzerland.

The Finance Minister also said that persistent efforts have been made with Swiss authorities to "break their banking secrecy".

"From the last one year we have had extensive negotiations with the Swiss authorities. The Swiss authorities have been moving in the direction of cooperation. I am delighted that this cooperation would not have fructified on a better day than when our government completes its one year," he said.