Why do millionaires keep their money in Swiss banks?

A few years ago, Swiss banks were highly popular with businesspeople from all countries of the world for two main reasons. First, they were extremely secure. Second, the information about the bank account holders was extremely well protected. The first advantage is still available while the second is gone. In the course of the de-offshorization processes, Switzerland has joined the CRS group. 

Swiss Banks

Common Reporting Standards (CRS) oblige the banks to report the financial information about the account holders to the fiscal authorities of their home countries. Why do rich people love Swiss banks anyway? There are several good reasons why honest and law-abiding foreign millionaires choose to bank in Switzerland and we discuss these reasons below.

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Why do rich people use Swiss banks?

Back in the 1970s and even 1980s, a person from any country could bring a few million to a Swiss bank in a briefcase, put the money into a numbered account and nobody would know about it. What a fantastic opportunity it was for drug dealers and tax evaders! Today, the opportunity is unavailable to them any longer. 

Switzerland has signed the CRS agreement and agreed to play by the FATCA rules so anyone who counts on ‘hiding’ money in a Swiss bank is going to be disappointed. You have to realize that a bank account in Switzerland does not protect your banking information from authorized agencies such as the fiscal authorities, for example. At the same time, a Swiss bank account does protect your information from everybody else.

Tax evasion is a crime and Offshore-Pro Group does not provide services to criminals. What we do is inform law-abiding wealthy people about the most efficient mechanisms that they can use to protect their legally earned money. A Swiss bank account is one of such mechanisms.

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Other asset protection mechanisms include foreign trusts, foundations, and holding companies. If you are interested in creating one of these legal structures to protect your assets, please contact us without hesitation.

Reasons why wealthy people choose to bank in Switzerland 

Well-to-do individuals from foreign countries open bank accounts in Switzerland because the banks in the country offer serious advantages. The main advantages include the following ones:

  • Information confidentiality. Swiss bank accounts are not secret anymore. At the same time, banking privacy is a top priority for Swiss bankers. The law forbids bank officers to disclose their clients’ banking information to any unauthorized person or agency. A bank officer who breaks the rule is going to be fired and maybe even put behind the bars. The bank will face a huge fine and serious reputational damage. This means that your account information is efficiently protected in Switzerland from everyone with the exception of official government organizations.
  • Deposit security. A Swiss bank cannot go bankrupt. Well, it can but if it does, another Swiss bank (or a conglomeration of banks) will step in and take on all the responsibilities of the bankrupt bank. Thus, if you keep your money in a Swiss bank, it is totally safe. 
  • Low rate of inflation. The Swiss franc is one of the most stable currencies in the world. The US dollar, the euro, the British pound, and other world currencies may fluctuate greatly but this doesn’t seem to affect the Swiss franc. The economy in Switzerland is incredibly strong too.

If you would like to consider the opportunity to open a bank account in Switzerland in more detail, please contact our banking experts and seek their advice. 

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Why total confidentiality of banking information is not available any longer

Many countries and especially the USA have been pressuring the Swiss banks for decades. They want the banks to disclose the account holders’ information to their fiscal authorities. Tax evasion has been only a minor evil that they are fighting against, as there is a more serious goal that they pursue. The matter is that a secret bank account can be used for financing terrorists. A war on terror was declared after the 9/11 attack.

Thus, the era of banking secrecy has ended. And this applies not only to banks in Switzerland but in all other countries as well. The Swiss Federal Tax Agency share the following information about bank clients with other countries in 2023:

  • The account holder’s name;
  • His/ her residential address; 
  • The country of citizenship and residence; 
  • Account balance and other details.

Please note that Switzerland has signed agreements on exchange of banking information with more than 100 countries. This means that Swiss banks do not exchange the information with several national states.

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Reliability of Swiss banks in 2023

It is true that the regulations concerning banking privacy have been changed but the reasons for that are quite understandable. Nobody wants to face the threat of a terrorist attack. However, even with the decreased level of banking privacy, wealthy people from different countries continue to bank in Switzerland. Probably the main reason why they do so is the banking security that they find in the country.

  1. Your deposit in a Swiss bank is 100% safe. Even if something goes wrong with the Swiss bank where you keep your money, you cannot possibly lose it because it is 100% insured. 
  2. The Swiss franc is one of the strongest currencies in the world. The bank deposit security is protected by the Swiss laws but it is not the only level of protection that the accounts with Swiss banks enjoy. The franc inflation rate is close to zero. Can you think of some other major currency that does not fluctuate? Can you think of another major currency whose inflation rate is negligible? Keeping your money in Swiss francs is secure.
  3. Overall economic stability of the country. The Swiss franc is not the only stable element of the Swiss economy. Other countries go through crises but nothing terrible seems to ever happen in Switzerland. Some scary things are going on in many places these days. But not in Switzerland. The economy of the country is as stable as ever, which makes banking there an attractive opportunity. 

As you can see, having a bank account in Switzerland guarantees your capital security. However, you have to bear an important aspect in mind: you have to be able to prove that your money comes from a legal source if you want to set up an account with a Swiss bank. Besides, you have to remember about the sanctions! A sanctioned person cannot open a bank account in Switzerland.

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Negative interests on Swiss bank deposits: is it that bad?  

When you put money into a savings account, for example, you expect that the bank is going to pay you an interest on your deposit. After all, you are effectively lending money to the bank and you have to be rewarded for that somehow. Many Swiss banks offer negative interest on some kinds of deposits. This means that in Switzerland, you have to pay to the bank for keeping your money safe. Is it fair? Can it be economically justified? 

We have to note that with certain types of deposits, you can get a positive interest in Switzerland. However, the interest rates are never very high. To get the highest interest on your deposit, you can open an investment account with a Swiss bank. At the same time, you must realize that certain risks are always associated with investments.

If you want your money to be absolutely safe in a Swiss bank, the interest on your deposit is probably going to be negative. Should this fact make you discard the opportunity to bank in Switzerland? Not necessarily and here are the reasons why: 

  • Banks in other countries offer positive interests on deposits but they charge certain commissions and service fees that Swiss banks do not charge.
  • If you deposit money into a Swiss bank at a negative interest, you can be sure that the rate is going to be stable. You cannot be as sure about the ever-changing commissions and administration fees that banks in other countries charge.
  • If you have a bank account in a currency that inflates, your money may lose more in real value than what you can earn from a positive interest.
  • High rates of inflation mean that you may have an interest rate that is effectively negative rather than positive. Thus, you may be paying as much (or even more) as you are paying for the security of your money kept in a Swiss bank.

Take the US dollar, for example. The current inflation rate is the highest in the last forty years. You have to make some calculations to see how much you have lost over the recent couple of years by keeping money in US dollars at 2 or 3 percent. Not ‘how much you have earned’ but ‘how much you have lost’ because the real value of your money has depreciated. Now calculate how much you would have lost if you kept your money at a negative interest in a Swiss bank. Because the value of the Swiss franc remains the same, it may well turn out that banking in Switzerland is more profitable than banking in the US or another country.

A negative interest on a bank deposit is not something we are all used to. There is another thing that we are used to though: we frequently see banks going bust. Well, Swiss banks don’t go bust. This is the main reason why millionaires from all countries of the world like to keep their money in Switzerland. They prefer to feel safe even though the interests on their bank deposits are negative.

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The interest on your deposit in a Swiss bank does not have to be negative! Wealthy individuals have access to some attractive private banking opportunities. Please find out what banks most millionaires use in 2023.

What Swiss banks do rich people use?

If you would like to bank in Switzerland, you have to be aware that some banks in the country will not take US clients onboard and some banks will deny services to people from sanctioned countries. If you do not fall into any of these categories, you have to look carefully at the service conditions that a particular Swiss bank offers. Our professional assistance in this matter would come in handy.

If banking security is your top priority in 2023, you should choose one of the Swiss banks listed below:

According to Forbes, three Swiss banks are listed among the best banks for wealthy people in 2023:

  1. Neon;
  2. Schwyzer Kantonalbank;
  3. Zürcher Kantonalbank.

According to other experts, the following Swiss banks are the most popular ones in 2023:

  1. UBS;
  2. Credit Suisse Group;
  3. Bank Julius Baer;
  4. EFG International.

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So why do rich people from all over the world prefer to bank in Switzerland?

Banking secrecy does not exist in the modern world. You cannot use a Swiss bank for tax evasion or money laundering purposes. (We hope that this is not the reason why you want to open a foreign bank account anyway.) Why should you consider the opportunity to open an account with a Swiss bank? The world as a whole has become a very insecure place to live. Turn on your TV set and watch the news. You will probably want to emigrate from the planet.

However, there are still some safe islets in some ‘secret’ places that are calm and safe. Switzerland is certainly one of such safe havens where you can park your money. No global catastrophes seem to affect Switzerland: the country has been economically stable and politically neutral for years. If security is what you are looking for in the first place, then you should bank in Switzerland without any doubt. 

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