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Banking

Private banking: Switzerland fights back in tax war

Offshore banking centres and the code of secrecy are under attack by governments hungry for tax revenues. But Switzerland’s private banks are adapting fast, and finding strength in openness and innovation. Helen Avery reports.

"THERE’S A FISCAL world war taking place," says Ray Soudah of Millenium Associates, a Swiss-based adviser to private banks. Data on offshore banking clients in Switzerland and Liechtenstein has been stolen and sold to governments for vast sums. Hervé Falciani, a former IT employee at HSBC Geneva, lives under a new identity after stealing and selling data on offshore French clients back to France. And rumours are floating around Switzerland that foreign governments have been employing secret service agents to spy on citizens who travel to Switzerland and have offshore accounts there. "I hear there are German spies at the borders," says a Swiss resident. Governments around the world are launching tax amnesties and media campaigns to strike fear into the hearts of those who bank offshore.

Banking centres such as Switzerland are also in the firing line. The country manages 35% of the world’s offshore money and increasing numbers of governments want to know whether that money owes them tax revenues. Secrecy is becoming a dirty word in banking and Switzerland, the world’s safety deposit box, is having to adapt. As Walter Berchtold, head of Credit Suisse Private Banking, says: "Business models which are based on tax optimization are not sustainable."

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