Switzerland asks banks to check illegal asset flows

Under pressure from India and other nations to act against black money menace, Switzerland will put in place stricter due diligence norms for banks to prevent inflow of illicit assets into the country.
Besides, banks would have to terminate their relationship with existing clients in case they are unable to provide the required tax compliance proof for current assets held by them.
The new due diligence requirements, being mandated for banks and other financial institutions, are aimed at making Switzerland a "tax-compliant financial centre".
Switzerland today said that in the future, banks and other financial intermediaries would have to comply with enhanced due diligence requirements when accepting assets in order to prevent the inflow of untaxed assets.

In this regard, the Federal Council has referred a corresponding dispatch on amending the Anti-Money Laundering Act to Parliament.
Long perceived as a safe haven for stashing untaxed assets, Switzerland has been making efforts to do away with its banking secrecy practices and among others, would be part of the global automatic exchange of tax information regime.

The latest move also comes at a time when Switzerland is making public names, including that of Indians, among scores of foreign nationals with Swiss bank accounts, for being probed in their respective countries.
According to the Swiss government, the new due diligence requirements should prevent the inflow of untaxed assets to the country.

The new norms would be in place for clients from countries where the future agreements on the Automatic Exchange of Financial Account Information (MCAA) do not apply.
"This means that they will not be applicable to clients whose country of origin has an MCAA with Switzerland. This also includes US clients, as FATCA effectively has an MCAA.
"The due diligence requirements are not applicable to clients who are resident in Switzerland for tax purposes," it said in a statement.
Financial intermediaries would have to put in place a risk-based assessment when accepting assets to determine whether or not the assets have been duly taxed.

The details of the risk-based assessment would be established by the supervisory authorities and the recognised self-regulatory organisation.
"Where a financial intermediary has to assume based on an assessment of this nature that a client is offering untaxed assets, the business relationship must be rejected in the case of new clients," the statement said.