Political science
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Running head: BANK SECRECY
Bank Secrecy
Rafael Dayan
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BANK SECRECY
Bank Secrecy
Bank secrecy is a legal principle in parts of the world that provides for the secrecy of a bank and its customers. Banks under the protection of secrecy are not allowed to provide information about the accounts of their customers to the authorities unless there are special circumstances, such as filed criminal complaints about the customers (Kingsbury, 2009). The main features of banks that provide bank secrecy include personalized customer care and more advanced security systems to safeguard both identity and capital of the customer. For these reasons, their services are more expensive than similar services by regular banks (Cartwright, 2005).
Authorities in many parts of the globe have expressed their concern with bank secrecy.
Provisions in European countries such as Switzerland, Austria, and Luxembourg and so on encourage tax evasion by citizens of bordering nations such as Germany and France. In 2009 growing tensions became a source of concern among many members of the European community prompting complains to the G20 and OECD. This led to the imposition of sanctions and pressuring of affected countries to change their banking procedures. The result was the implementation of tax treaties in most countries and a relaxation of the rules. In Switzerland, this led to the removal of a distinction between tax fraud and tax evasion for non-citizens. The lack of a distinction was previously a source of concern because the Swiss banking system did not consider tax evasion complains. The pressure is also expected to result in relaxation of tax rules in Austria and Luxembourg.
3
BANK SECRECY
In Switzerland, Bank secrecy was created by the Swiss-banking act in 1934 and resulted in the formation of the world famous Swiss bank. Bank secrecy is one of the fundamental principles of private banking. Creation of private banking is Switzerland saw the
Running head: BANK SECRECY
Bank Secrecy
Rafael Dayan
2
BANK SECRECY
Bank Secrecy
Bank secrecy is a legal principle in parts of the world that provides for the secrecy of a bank and its customers. Banks under the protection of secrecy are not allowed to provide information about the accounts of their customers to the authorities unless there are special circumstances, such as filed criminal complaints about the customers (Kingsbury, 2009). The main features of banks that provide bank secrecy include personalized customer care and more advanced security systems to safeguard both identity and capital of the customer. For these reasons, their services are more expensive than similar services by regular banks (Cartwright, 2005).
Authorities in many parts of the globe have expressed their concern with bank secrecy.
Provisions in European countries such as Switzerland, Austria, and Luxembourg and so on encourage tax evasion by citizens of bordering nations such as Germany and France. In 2009 growing tensions became a source of concern among many members of the European community prompting complains to the G20 and OECD. This led to the imposition of sanctions and pressuring of affected countries to change their banking procedures. The result was the implementation of tax treaties in most countries and a relaxation of the rules. In Switzerland, this led to the removal of a distinction between tax fraud and tax evasion for non-citizens. The lack of a distinction was previously a source of concern because the Swiss banking system did not consider tax evasion complains. The pressure is also expected to result in relaxation of tax rules in Austria and Luxembourg.
3
BANK SECRECY
In Switzerland, Bank secrecy was created by the Swiss-banking act in 1934 and resulted in the formation of the world famous Swiss bank. Bank secrecy is one of the fundamental principles of private banking. Creation of private banking is Switzerland saw the
References: Bank Secrecy Act suspicious activity report use is increasing, but FinCEN needs to Further develop and document its form revision process : report to congressional requesters.. (2009). Washington, D.C.: U.S. Govt. Accountability Office. Cartwright, S. (2005). The Blackwell encyclopedia of management. Malden, Mass.: Blackwell Pub.. Hardy, P. D. (2010). Criminal tax, money laundering, and Bank Secrecy Act litigation. Arlington, VA: BNA. Kingsbury, N. R. (2009). Information security further actions needed to address risks to Bank Secrecy Act data : report to congressional requesters.. Washington, D.C.: U.S. Govt. Accountability Office.