[FOUNTAIN]New haven for dark cashIt began with good intentions when Swiss banks opened confidential accounts. In the late 19th century, many people had lost their wealth during the Franco-Prussian War, and Swiss bankers granted complete confidentiality to their clients in order to protect the wealth of persecuted people. Since 1934, confidential accounts have been protected by law. When the Jews began selling real estate and depositing their money with banks in Switzerland, the Swiss government created a law on bank secrecy. By helping the Jews to protect their funds, the country was popular among the rich. Not only Jews but also financial criminals and dictators flocked to Swiss banks to hide their illegally accumulated money.
As institutions in a permanently neutral state, Swiss banks focused on protection of secrecy, but their ethics were called into question when it was revealed in the late 1990s that they had confiscated the unclaimed savings of the Jewish victims of the Nazis. A security guard of a Swiss bank disclosed a pile of documents that were supposed to have been destroyed. The documents included transactions made in Berlin before World War II. The files confirmed the speculation that some banks had kept silent about the money that could have been returned to the descendants of the clients. In 1997 alone, Swiss banks paid over 300 million dollars to settle with the survivors of the clients.
The confidential accounts in Swiss banks do not earn interest. Until the 1980s, clients had to pay fees to bank with Swiss banks. It is estimated that over 1.2 trillion dollars from all over the world is deposited in the personal accounts at some 400 Swiss banks.
Since the 9/11 terror attacks, Swiss banks’ secrecy has been criticized as a help to terrorists. Closing the confidential accounts in Swiss banks was called one of the most effective ways to press terrorist organizations. But Switzerland firmly believes that banking secrecy and crime are separate issues. As the reputation of Swiss banks fell into jeopardy, some people forecast that Singapore would replace Switzerland as an offshore banking haven. Greedy human nature, that does not distinguish dark money from innocent wealth, continues to help terrorist organizations.
by Lee Se-jung
The writer is an editorial writer of the JoongAng Ilbo.