Swiss National Bank and Parliament illuminated at night showing Swiss banking secrecy

Swiss Government Proposes Backdoor in Its Banking Secrecy Laws for Spy Agency; Pressure Applied by UN Over Human Rights Concerns

The private Swiss bank account has been one of the country’s distinguishing features for nearly 100 years. But these banking secrecy laws began to see significant erosion in 2018, and are facing another substantial blow as the country’s government is proposing to allow its spy agency to monitor financial transactions.

This comes amidst debate about doing away with the country’s famous banking secrecy laws entirely, as the United Nations applies pressure in the wake of the Credit Suisse scandal.

Remains of banking secrecy law under fire after revelations of criminal conduct

The Swiss government presented a draft of a new intelligence law that would give the country’s Federal Intelligence Service (FIS) the power to request information about entities with bank accounts that are suspected security risks. At present, the FIS has very little ability to scry into the financial transactions of domestic customers.

The draft law says that this will apply to “serious threats” and will allow the FIS to request information that “clarifies financial flows” to and from suspect accounts. Any such requests would have to be authorized by both the Federal Administrative Court and the defense minister. The measure is in an open comment period until September 9.

At one time, the Swiss banking secrecy laws gave both foreign and domestic customers almost complete insulation from the outside world. Serious change began in late 2018, when the Federal Tax Administration (FTA) began providing bank account data to other countries for the first time. This new policy essentially ended the country’s run as a global home for tax evasion, but it also shone a light on the nature of much of the business passing through these financial institutions. The exposure of accounts held by Russians evading sanctions, outfits that engage in fraud and millionaire tax evaders from all over the world put further pressure on the banking secrecy laws. This situation came to a head with the Credit Suisse data leak of February 2022, which revealed that the bank was providing services to a broad range of criminals and human rights abusers.

Banking secrecy laws could be ended entirely under pressure from UN

The Credit Suisse incident prompted involvement from the UN, but its officials were more concerned about an article of the Swiss banking secrecy law that potentially allows whistleblowers to be prosecuted for reporting on criminal activity.

The Swiss parliament is considering amending this measure under pressure from UN officials, who say that it violates international law and human rights. Article 47 presently allows for jail sentences and fines for anyone leaking information covered by the banking secrecy law, even if it is a journalist or activist following a story of public interest that exposes some sort of malfeasance. Journalists reporting on the Credit Suisse leak were subject to prosecution under this measure, and the Swiss media was thus largely forced to stay away from the story.

United Nations special rapporteur for freedom of opinion and expression Irene Khan has said that Article 47 puts the Swiss banking secrecy law in conflict with the terms of international conventions that Switzerland has signed, specifically Article 19 of the international covenant on civil and political rights and Article 10 of the European convention on human rights. Switzerland has signed on to and agreed to uphold both of these measures as part of its obligation to international law.

If the Swiss parliament does not amend Article 47 prior to June 24, Khan has announced her intention to bring the issue to the UN Human Rights Council. An initial vote on May 6 saw Swiss politicians reject a proposed revision. Article 47 had just been expanded to include journalists in its terms in 2015, after a rash of leaks of information about criminal bank clients to foreign journalists. The revised terms allowed for jail sentences of up to three years for journalists disclosing protected information, and up to five years if they were found to have profited from the venture.

Swiss banking secrecy laws began to see significant erosion in 2018, and are facing another substantial blow as the country's government is proposing to allow its spy agency to monitor financial transactions. #privacy #respectdataClick to Tweet

Swiss politicians that support the banking secrecy law point to the fact that no journalist has actually been prosecuted since the terms were expanded. However, the terms grant the government the right to prosecute anyone even possessing protected information, let alone making an attempt to publish it. And though Swiss officials are technically correct in saying that journalists have yet to be prosecuted, whistleblowers have been sentenced under the law before. One recent example occurred in 2019, when a former banker with UBS assisted German authorities in an investigation in their country by secretly passing bank information to them. The banker was handed a sentence of 40 months in jail and a suspended fine, in absentia as he had since moved to Germany (and was not eligible for extradition).


Senior Correspondent at CPO Magazine