The Myth (or Legend) of Anonymous Swiss Bank Accounts vs the Reality of US Banking Privacy

Anyone who has watched movies or TV in the last 40 years KNOWS that Swiss bank accounts are totally anonymous, provide untraceable transactions to the most despicable of criminals, and that Swiss Bankers are humorless drones that only need your bank account number and your password. Thank goodness for our friends in Hollywood because otherwise we might get the wrong impression! Not surprisingly Hollywood got it wrong again.

In 1934, following a series of scandals where damaging and embarrassing private information about bank clients were released to French investigators, the Swiss government enacted the 'Banking Act' which codified strict rules regarding the disclosure of private client information. The idea that Swiss bankers did not know, or perhaps even more chilling didn't want to know, their clients, or that they issued totally anonymous bank accounts makes for a good plot twist in a mystery novel or movie, but really never existed. Swiss Bankers were always required to share information about criminal acts and tax fraud. Only under Swiss law failing to disclose income was not considered tax fraud, but rather tax evasion. Acts of tax evasion were not serious enough to share with the authorities.

Well this has all changed. Swiss bankers now share just about everything and anything about their clients, the Swiss distinction between tax fraud and tax evasion has been removed, and what little "anonymity" that may have existed is now dead.

Don't get me wrong! I am sure Swiss banks are still great places to put your money, and provide many legal and ethical ways of assisting their clients, but they no longer provide even a smidgen of the mythical all encompassing privacy shield that Swiss bankers encouraged people to believe, and Hollywood sold like a pack of cigarettes.

It is my considered opinion that some of the best banking privacy in the world is now found in the United States of America. As long as you are not "laundering money" (the vague definition does cover a lot of ground) or supporting national security threats, the US provides some of the most strictly ENFORCED privacy rules around. Notice my emphasis on the word ENFORCED.

There are many jurisdictions that have such amazingly draconian bank privacy laws that you wonder why anyone would ever take the risk of becoming a banker in those countries. I am thinking of one small country where even a minor disclosure released through mistake can result in jail time and fines for the banker, at least under the terms of its laws. Wow! That must mean that your money and your information is safe! Well let us look at how often these laws are enforced. After all no one is perfect. In the country I am thinking of there has never been, to my knowledge, a single banker prosecuted under the draconian bank privacy laws. Not even a slap-on-the-wrist or a probated sentence. Either bankers in that country never make mistakes, or the laws are never enforced. What good are bank privacy laws that are not enforced?

In the USA on the other hand bank privacy laws are enforced (to the chagrin of most of my banker friends) by a bevy of alphabet soup Federal, State and Local agencies whose only reason to exist is to enforce various consumer protection laws, banking disclosure rules and credit protection regulations. In addition to all the government agencies looking to enforce these rules (and levy punitive fines that go to fund their activities), the laws themselves almost always give the victim the right to sue the bank in civil court with punitive damages and attorney's fees awarded. I know a lawyer who specializes in class-action law suits against banks who violate these consumer protection rules.

In addition most states have enacted Deceptive Trade Practices Acts which provide treble damages plus attorney's fees to the victim of any Deceptive Act, disclosure of prohibited information being among them.

Because of these consumer protection laws combined with vigorous government enforcement along with civil court remedies for victims, US Banking has become some of the most private in the world in spite of the rather sinister reputation of the Patriot Act.

Contact me if you would like further information.