New leak shows Swiss banking secrecy and illicit financial flows is still a serious problem
The Suisse Secrets leak confirms civil society's long held concerns that trusts can be used to circumvent transparency rules and hide money. The era of bank secrecy is far from over.
More than a decade ago, the Organisation for Economic Co-operation and Development (OECD) published a report claiming that “The Era of Bank Secrecy is Over”. Since then, numerous leaks and scandals have proven just how untrue this is, with the latest leak -The Suisse Secrets- coming just this week.
Under the coordination of Süddeutsche Zeitung and the Organized Crime and Corruption Reporting Project (OCCRP), an international group of journalists published a broad range of articles about the leak. At the core of the scandal is leaked data from the bank Credit Suisse, with information concerning more than 18,000 bank accounts. The leak reveals that illicit financial flows arestill a major issue and that a number of problematic customers -including people linked to human trafficking and corruption- appearto have been hiding large sums of money in the bank.
Information exchange – not very automatic
Over the last decade, the OECD and G20 have introduced rules regarding the automatic exchange of information between countries, which has helped many of the larger and richer countries access information needed to expose and prevent tax evasion and other types of illicit financial flows. Unfortunately, as highlighted by The Guardian, the rules were designed in such a way that most of the world’s developing countries were left in the dark.
Tove Maria Ryding, Tax Coordinator at Eurodad, said:
“We know that the OECD rules on automatic information exchange are not working effectively for most developing countries. The Suisse Secrets illustrates that these countries continue to pay a heavy price for this in the form of illicit financial flows continuing to flow out of their countries. We need an international system for automatic information exchange that takes into account the concerns and interests of the poorest countries.”
Loopholes in transparency
Civil society organisations have long raised concerns about the fact that secret trusts can be used to circumvent transparency rules and hide money. Ryding said:
“Transparency rules with loopholes are as ineffective as a bucket full of holes. The EU has introduced public registers for owners of companies, but not for owners of trusts. The Suisse Secrets show that we were right to be concerned about trusts being used to hide the true owners of wealth and facilitate illicit financial flows. Right now, the European Union is revising its Anti-Money Laundering Directive and it is a perfect time to close the loopholes, including by introducing public registers for owners of trusts and similar legal structures.”
Lack of protection of whistleblowers and free media
As part of the Suisse Secrets, OCCRP highlights that: "Journalists and experts say Switzerland’s draconian banking secrecy laws effectively silence insiders or journalists who may want to expose wrongdoing within a Swiss bank. A Swiss media group was unable to participate in the Suisse Secrets investigation due to the risk of criminal prosecution."
Ryding said: “Whistleblowers and investigative journalists are absolutely essential for exposing illicit financial flows and international tax dodging by the world’s wealthiest people and corporations. It is clear that we have a long way to go to ensure proper protection of the brave people who expose the deep injustices of our tax systems. Governments must make sure their laws protect journalists and whistleblowers – not tax dodgers.”