As the famed secrecy walls of Swiss banks crumble under continuing global pressure, it now emerges that secret codes were used not just for account details but also for communications between the bankers and their clients.
A number of such codes, including ‘iTunes’ and ‘gas’ for funds and ‘download’ for instruction to transfer the money are coming to the fore after a number of banks signed settlement agreements with the US tax authorities.
The information being shared by the Swiss government with India and other countries on suspected black money accounts is also removing the layers of secrecy employed by the banks to keep the clients and their money away from the preying eyes of tax authorities and other enforcement agencies.
The fresh details are, however, also adding to an already tough job of unearthing the illicit funds as a significant portion was diverted to a number of other jurisdictions, including Singapore, Israel, Cyprus, Lebanon, Hong Kong and Dubai, shows the ‘Statement of Facts’ shared by various Swiss banks with the US Department of Justice.
The banks have also admitted to assisting their clients in using sham entities registered in various jurisdictions, bogus insurance products and providing fake nominees to be shown as ‘beneficiary owners’ of undeclared funds.
It has also emerged that Swiss banks sent relationship managers to high-profile sporting and entertainment events across the world to lure wealthy customers looking to park their undeclared money in a ‘safe custody’.
The clients were also entertained at exotic locations by the bankers on a regular basis.
The use of ‘numbered accounts’ is already well known. In many cases, the banks also disguised their clients’ home country by mentioning the names of the jurisdictions that were not considered to be very tough on tax evasion.
Some common code phrases used included the clients asking their relationship managers at the bank to “download some iTunes” when they actually wanted funds to be repatriated.
The clients were given pre-loaded cards to use the funds and when they wanted extra cash they would typically tell the banker that the “gas tank was running empty”.
Since 1935, Switzerland had maintained criminal laws that ensure the secrecy of client relationships at Swiss banks. While Swiss law permitted the exchange of information in response to administrative requests made pursuant to a tax treaty with a country and certain legal requests in cases of tax fraud, Swiss law otherwise prohibited the disclosure of identifying information without client authorisation.
Because of the secrecy guarantee that they created, these Swiss criminal provisions have historically enabled people from foreign countries including India to conceal their Swiss bank accounts from the tax authorities back home.
However, Switzerland has been under intense pressure in recent years from India and other countries to clamp down on those suspected to be stashing illicit wealth in Swiss banks.
Of late, Switzerland has begun to shed the famed banking secrecy veil and has begun making public the names of Swiss bank accounts holders about whom it has been approached by foreign countries for information.