Is There Such A Thing As Banking Secrecy Anymore?
It’s certainly debatable. In Switzerland, still the epicenter of the private banking world, confidentiality laws remain on the statute books. But this fundamental pillar of the Swiss legal system is undoubtedly being weakened as Berne acquiesces to the transparency demands of foreign nations and plurilateral organizations, the latest of which was the joint declaration by Switzerland and Australia on the implementation of automatic information exchange in tax matters. Not that Switzerland can really be condemned for giving ground. It has been surrounded by the massed ranks of the world’s tax inspectors for a number of years, and generally it hasn’t given in without putting up a good fight. These days the phrase “banking secrecy” is used in a pejorative way, alongside other uncomplimentary descriptors of wealth management and offshore finance, like “tax haven,”, and many people would probably denounce me for defending it. But in the hysteria that accompanies each new tax avoidance scandal in Europe, North America, and elsewhere, people tend to overlook the inexorable erosion of individual privacy brought about by each new international transparency initiative. I’d be interested to know how many of the government ministers who routinely praise the work of the OECD in this area have grasped what automatic exchange of information actually entails. Briefly, let me explain: “automatic” exchange of information means the periodic and bulk transmission of personal data between tax and other authorities, as opposed to information sent by one jurisdiction to another on request when there is sufficient grounds to suspect somebody of tax evasion. So it doesn’t really matter whether you’re guilty of anything or not anymore. Your precious personal and financial information could soon be beamed around the world without your consent, or, indeed, your knowledge. Not only this, we know how easy it is these days for data to leak, by accident, by design or by the sheer incompetence of the authority entrusted to secure the information. Is this a price worth paying to catch what is surely a relatively small number of people determined to evade tax? You probably know where I stand.