Swiss bank accounts have always been the safest in the world. This truism is irrefutable because Switzerland as a Financial Center capitalizes on the four basic principles of Stability, Universality, Responsibility, and Excellence. Therefore, many international companies, corporations, and HNWIs armor themselves with non-resident Swiss accounts for asset protection, diversification, and growth.
Just recently, we have considered in detail depositor protection in Switzerland. Now, let us look into the basic aspects of offshore accounts opening in Switzerland and discuss how you can also take advantage of this “safe haven” for individuals and companies from all over the world.
Why do experts recommend Swiss bank accounts for foreigners?
Banking in Switzerland has a long history dating back to the Middle Ages. Thanks to these old roots and the banking culture passed down for generations, the country is lucky to have a community of highly qualified experienced international bankers.
Experts of three major rating agencies – S&P, Fitch, & Moody’s – rank the Swiss state-supported depositor protection system as the best possible guarantee for depositors.
Remarkably, besides the global respect to the Swiss old school rules in the banking system, this jurisdiction has earned the reputation of the world’s cutting-edge innovation and tech hub.
This is perhaps the most extraordinary signature feature of Switzerland – the ability to harmonize the old and the new, to conserve and innovate, to benefit from protectionism and multilateralism in global trade, to take advantage of the national identity and multiculturalism, maintain the political neutrality and participate in peace-building processes and alliances around the world, to equipoise the social, environmental, economic sustainability and prosperity.
Thanks to the above-mentioned capacity of the jurisdiction to find the golden mean, the downturns of the current and recent global recessions in Switzerland have been shallower, and the recovery is underway.
In the aftermath of the world crisis in 2008, Switzerland launched a reform of financial regulations. Among the new and revised laws are the Ordinances on banking matters that have enforced the following changes:
- new international capital and liquidity standards and buffers;
- the upgraded cross-sectoral regulation framework;
- the new AEOI-Act on tax information exchange with partner states to comply with the CRS AEI standards;
- AML/CFT framework upgraded to meet FATF recommendations.
Here are some facts illustrating Switzerland’s current standing as the world’s banking and financial hub.
- Depositor protection in Switzerland is a three-tier system for preferential deposits, protected deposits, bankruptcy privilege.
- Zurich ranks 2nd and Geneva 5th among European financial centers (Source: The Global Financial Centres Index (GFCI).
- 90% of bank customers gave excellent marks to Swiss banks in 2020.
- In 2019 through 2020, the positive dynamics of Swiss banking featured the 13% year-on-year surplus (CHF 7,893.4 bn in 2019) in assets under management (Source: the Swiss Bankers Association, 2020).
- The global market share of Switzerland in the area of assets managed outside the owner’s home country was 27% in 2019. This means that Switzerland is the worldwide leader in cross-border wealth management.
Switzerland accounts for almost a quarter of all cross-border assets under management worldwide. The share of non-resident customer assets in Switzerland is at 46.6%.
Judging by the economic health vitals featured in the Banking Barometer 2020 of the Swiss Bankers Association, the Swiss banking reform undertaken in the wake of the previous recessions has proven its pragmatic worth in the current crisis.
The poll conducted among customers last year revealed their satisfaction with
- the top quality of customer care and customer relations
- the diversity of quality services and products
- the quality advice ranging from investments, taxes, inheritance to philanthropy.
How to shortlist Swiss banks before you apply for your non-resident accounts?
Today, there are 246 banking institutions in Switzerland (Source: the Swiss Bankers Association, 2020). Each financial institution offers services for the retail, corporate, and wealth management segments. There are universal and specialized banks. Conventionally, banks can be divided into three groups:
TOP-LEAGUE banks. These include the top-tier Swiss banks – Credit Suisse and UBS. These institutions dominate the market in terms of the number of branches, staff, relationships with institutional groups. They also have subsidiaries and operate beyond Switzerland.
MIDDLE MARKET banks are smaller financial institutions registered in Switzerland. They do not have offices abroad. Their services are designed for clients with different levels of capital.
BOUTIQUE BANKS are small private banks in Switzerland that specialize in providing services to the wealthy segment of clients. Boutique banks manage family capitals, assets.
Accounts can be opened by non-residents in CHF, USD, EUR, CAN, GBP.
There are savings, investments, and universal banks. Before submitting a package of documents to the bank, you need to determine the purpose of having a Swiss bank account. Most foreigners open investment accounts, and banks normally require that non-residents deposit not less than CHF 1 million.
The terms and conditions for opening and maintenance of accounts in Switzerland depend on the chosen bank. The bank tariffs and fees also vary, even within one bank depending on the client profile. If you know the nuances or engage a professional expert to facilitate you in selecting the banks and accounts for opening non-resident accounts, Swiss account maintenance can be quite reasonable and bank products profitable.
You must have heard that since 2015 most Swiss banks quote near-zero and even negative rates on deposits. And yet Switzerland is the world leader in cross-border wealth management. As you understand, slow and sure wins the race.
How is the Swiss banking secrecy guaranteed for foreigners holding accounts?
The right to privacy is guaranteed in Switzerland by the Federal Constitution (art. 13 FC), the Federal Law on Banks and Savings Banks (BankG).
The Swiss Banking Act penalizes the disclosure of confidential information. Breaching bank secrecy is a criminal offense with fines and prison sentences of up to five years. Whistleblowers and those who withhold customer information often face public hostility and professional failures.
From a legal point of view, banking secrecy in Switzerland ensures the right of every individual to privacy including economic privacy and information about their banking relationship and related assets. Thus, secrecy applies to both natural and legal persons. Privacy rules prohibit banking institutions, their officers, and employees from disclosing customer data to third parties.
However, the above-mentioned banking secrecy does NOT mean that Swiss banks do not perform the KYC identification and verification of clients. There are no anonymous accounts in Switzerland. Since 1977, there is the Swiss banks’ code of conduct concerning the exercise of due diligence (CDB) specifying every step banks need to undertake to verify clients’ identities and documents. This Code features provisions for prohibition of active assistance in flight of capital, tax evasion, and similar acts.
The due diligence procedure takes time and is rather costly for banks. However, Swiss banks meticulously conduct the screening of applicants, as they refuse to cooperate with high-risk clients, for example, politically-exposed persons. Or, they may request additional information and documents about such clients, to be on the safer side reputationally.
The Swiss legislation does not protect those who abuse laws and tax regulations, e.g. criminals. Besides, Swiss banks are legally obliged to disclose information in criminal proceedings against their clients, no matter where the offense has been committed – in Switzerland or abroad. Moreover, since 2019 the AEI/CRS standards oblige Switzerland to exchange information with partner states with which this jurisdiction has signed relevant agreements.
Switzerland’s mechanisms for combating money laundering include the Swiss Criminal Code (Art. 305 bis and 305 ter SCC), today also comprise the Federal Act on Combating Money Laundering and Terrorist Financing (AMLA) and a corresponding ordinance of the Swiss Financial Market Supervisory Authority (FINMA) on the prevention of money laundering and terrorist financing (FINMA Anti-Money Laundering Ordinance, AMLO-FINMA), as well as the CDB mentioned previously.
And yet, the 2020 Tax Justice Network’s Financial Secrecy Index named Swiss banks among the least transparent banks in the world.
How can you learn about the Swiss banks’ current requirements set for non-resident applicants for opening accounts?
After the 2008 financial crisis, lawmakers in the European Union and Switzerland worked to improve regulations to prevent illegal financial transactions. All of these changes have made banks even more cautious about the potential clients they accept and the types of assets they hold.
The degree of banks’ restrictions by domicile and citizenship of clients vary and depend on the current political situation. For more details that would be relevant to your jurisdiction and business profile, please refer to our experts. We invite you to fill out the online form. Your answers to the questions will help our experts prepare for the discussion with you. The online one-on-one consultation is free.
How long does the compliance procedure take when foreigners apply for Swiss bank accounts?
As mentioned above, the KYC procedure in Swiss banks may be quite long (2-6 months). But if you involve a professional expert it may be much faster (down to 10 working days).
The wait time and the bank’s decision will depend on the quality of completed and submitted documents.
How does the procedure for opening bank accounts for foreigners in Switzerland work?
There are twoen ways to apply:
You can personally visit a bank office and apply for opening an account according to the standard procedure.
You can book a legal facilitation service from our experts. In this case, opening an account will be done remotely. Foreign banks like to cooperate with professional service providers like our experts, because, they are qualified and experienced in many fields. First of all, they know the standard and bank-specific KYC procedure and can conduct the pre-approval inspection of your application portfolio. This is very convenient and strategically wise because if your application is approved in principle the bank gets a verified promising client, while you are assured that your efforts are not in vain. In practice, most Swiss (European) banks prefer to cooperate with experts rather than directly with clients on matters concerning the application.
Having discussed many reasons why we highly recommend Switzerland as a very beneficial destination for opening non-resident accounts and having answered many how-tos, let us share the following 3 useful insights in conclusion.
First, Switzerland is a Confederation. Cantons have the right to set different tax rates. Therefore, the choice of the canton makes a difference. Some cantons feature rather low taxes for foreign individuals and companies.
Second, choosing the right bank out of nearly 300 Swiss banks is an important yet demanding task. You will need to specify your goals, make some research on banks by your objectives and other criteria, investigate the recent updates in the Swiss legal environment, analyze possible challenges and feedback from other non-resident clients. The wrong choice can be critically wasteful in terms of your time, efforts, and business opportunities.
Therefore, even (and mostly) the savviest and the most successful applicants for opening Swiss bank accounts turn to professional experts for help in selecting the bank and accounts.
Third, as many wealthy families decide to relocate to Switzerland, they need local assistance in many issues. It’s a long time since the institute of family offices appeared in Europe. Family offices assist and advise inbound families in many ways – in the acquisition of real estate, advising on educational establishments, banks, taxes, charity, luxury items, insurance, financial accounting, family events planning, they ensure privacy, and resolve many other matters.
HNWIs and families with private wealth of over USD 150 million are ideal candidates for establishing family offices. It can be a single family office, a multi family office, an embedded family office.
There are many reasons why the publicly available information on family offices and how they can be set up in Switzerland is scarce. If you need relevant advice or details, please mention this in your form which you can fill out online here. and submit for booking a free private consultation with our experts.