Banking secrecy originated in Switzerland. It dates from 1934. People mainly use it to deposit money that they have embezzled and/or on which they do not want to pay tax, at a bank. The bank does not provide this information to third parties. In recent years, banking secrecy has come under pressure and banks in Switzerland and Luxembourg, among others, will stop doing so. This causes panic among savers. Banking secrecy is a principle within the banking world. When banks say that they know banking secrecy, they indicate that they keep the personal information of their customers secret. This can be done by means of numbered bank accounts that are not registered. Banking secrecy has its origins in Switzerland. It was introduced there in 1934. Many (Jewish) refugees and governments took advantage of this opportunity to deposit their money there. The phenomenon of banking secrecy has gotten a bad name because many private individuals have used this option to deposit money earned illegally, for example by organized crime, into a bank account so that they do not have to pay tax on it.
Bank secrecy at banks
Private individuals may have various reasons for using bank secrecy. This is usually done in order not to have to pay tax on income. Another reason why the money can be put away is because it concerns embezzled money, for example in the case of a bank robbery. People can also put the money there because they want to trade in shares. Not every employer allows their employers to trade in shares because a conflict of interest could easily arise.
Which countries have banking secrecy?
Banks that practice banking secrecy are not allowed to share privacy-sensitive information with third parties, such as tax authorities and foreign governments. In Switzerland this is only possible with the consent of a Swiss judge. In the case of a serious crime, banks are also allowed to block accounts themselves. This could, for example, be for the purpose of identifying a terrorist who wants to commit an attack. In the Netherlands there are no banks that practice banking secrecy. This is not legally allowed. The most famous countries with banking secrecy in Europe are Luxembourg, Switzerland, Austria and Liechtenstein. Outside Europe these are the Cayman Islands and Panama. Bank employees are also not allowed to secretly share information with third parties. There are high penalties for this.
Bank secrecy under pressure
Banking secrecy has come under pressure in Europe in recent years. Through a bank employee, the German tax authorities obtained a CD-ROM from a Liechtenstein bank containing the details of a large number of Germans who had deposited their money in the small Alpine country. This has caused a deterioration in relations between Liechtenstein and Germany. The Netherlands is also actively hunting people who stash their money in a bank in Luxembourg, for example. Luxembourg, Switzerland and Austria are also in the process of abolishing banking secrecy or making it less strict. They do this under pressure from the European Union. This threatened economic measures against the countries in question if nothing changed.