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History of Swiss Bank Accounts

24 April, 2011

The Swiss banking system follows code of secrecy for more than 300 years. The code of secrecy started from, the era of French Kings who needed high confidentiality, the fiscal requirements and capacity to return the borrowings.

The legality of the secrecy is even much older than the system. In 1973, The Great Council of Geneva implemented directives to keep all the information of their account holders secret for the bankers.

Switzerland’s Bank Act of 1934

This confidentiality of information made the Swiss bank accounts more popular around the globe to keep the funds of various rulers and other secret and safe. The banking rules permit any account holder to claim damages from the banker in case he or she perceives that his or her information had been leaked anyway. But the banker could not be prosecuted for criminal offense for disclosing the information. The same secrecy codes prevailed until the end of nineteenth century.

Swiss civil code and the labor code offered protection to these secrecy rules. formation in the times of depression and financial crunch faced in 1929. The law protected the information when Switzerland’s Bank Act of 1934 was implemented when it was felt that these rules may not be able to protect the in Germany and France was pressurizing the bankers to reveal the information on the basis of “good of the state”. The law clearly mentioned that sharing any secret banking information is a criminal offense and may lead the banker to imprisonment.

German Gestapo Era

The Hitler in his era once announced to death sentence for the German citizens if they had any foreign capital. During this time the German Gestapo intimately kept eyes the Swiss Bank Accounts. This factor reinforced the Swiss bankers to keep the information secret. The Swiss citizens favored the bank secrecy in polls of 1984.

Nazi Gold Era

Before the World War II, the Jews from different European countries deposited their savings in Swiss Bank accounts. After the WWII, the accounts were inaccessible for these Jews on account of non-availability of documentation.

The Swiss bankers had to face a great pressure on this account coupled with German continued demands for information. During these times Christopher Meili, an ex-bank security guard revealed the bank with which he had worked. He maintained that the account holders had been killed during the war and their wealth may not be given back to their successors. Some reports suggested that gold valuing as much as 400 million dollars (approximately 3.9 billion dollars now) was moved to Swiss National Bank in Bern. This gold was supposed to belong to the Jews. It was supposed to melt and finance the WWII. The Switzerland felts threat of attack from Germany in those days. This gold while melting was mixed with some other gold to conceal identity of the gold.

The Paris Agreement of 1946

After the WWII, in 1946 the Paris Agreement was signed by the allies to prevent the Nazi to take the control and to help the war victims. According to the agreement the non-monetary gold collected from Germany and 25 million dollars shall be contributed to Intergovernmental Committee on Refugees.

Allied-Swiss Washington Accord of 1946

The allies of the war requested Switzerland to join the Allied-Swiss Washington Accord of 1946. According to the accord Swiss representatives intended to contribute gold of 250 million Swiss francs to Tripartite Gold Commission’s (TGC) gold reserves. In return the names of allies were surrendered from the claims of Swiss bank accounts. Recognized claims against the monetary gold pool greatly exceeded the amount of monetary gold actually recovered. So the TGC established a proportional redistribution system which established that each country would receive approximately 65 percent of its recognized claim.

Swiss Federal Decree

However the inactive accounts and the accounts with no survivors were not discussed in the accord. At that time the Swiss representatives assured that such funds shall be utilized for welfare of victims of war. But they took no action until 1962. In 1962, according to Swiss Federal Decree, all such accounts were analyzed and reported and approximately 9.5 million Swiss francs were handed over to the successors of the account holders. One third of the remaining unclaimed deposits were given to Swiss Central Agency for Refugee Assistance and two third were given to Swiss Federation of Jewish.

Investigation of Swiss Bankers Association 1995

In 1995, the Swiss Bankers Association initiated proceedings to work out other inactive or dormant accounts. Almost 32 million dollars were found which belong to pre war era and belonged to various nations.

Historical Commission, an ad hoc was formed to dig out the traces. The secrecy laws were suspended for a period of five years to enable the commission to investigate. The commission mentioned 3-5 years time period to complete the investigations and the report shall be presented in the Parliament.

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by Gemma Maddock

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