Few aspects of offshore banking are so fascinating than bank privacy. Many times this concept brings to our minds the negative images such as tax evaders hiding unreported income into an offshore bank account, the briber funds, the violator of securities laws hiding illegal obtained profits, the politician creating a retirement fund, a husband hiding money from his wife, citizens evading taxes and such examples can continue on and on. All these are actors in the global offshore banking system. However, the topic of offshore banking secrecy goes beyond all these scenarios and issues and represents a subject of growing importance for the international financial and banking sector.
Who needs bank secrecy? I guess everybody. The demand for bank secrecy, that is in essence the non-disclosure of financial information that the clients are willing to pay for is determined by a set of motives such as personal, business, fiscal, political and sometimes even criminal.
Offshore banking sector delivers financial secrecy that is sought by many individuals and entities. In offshore banking jurisdictions secrecy is one of the most valuable products and is an important stake therefore disclosure is limited as far as possible. At the end of the day their business depends on it. Any form of disclosure will damage the value of what is understood under the concept of bank secrecy. However there is a price to pay when acquiring secrecy as it is a valuable product of offshore banking sector. Some are list prices, such as bank interest rates, bond yields and equity returns while others are negotiated individually.
The roots of offshore banking secrecy are really old. For example bank secrecy in Switzerland has emerged from the tradition of personal privacy. This tradition goes back to the times of feudalism. The legal base of Swiss bank secrecy is based on the personal rights establishing in the Swiss Constitution, the Civil Code and the Criminal one. Nowadays Swiss banking system is one of the most protected and the most reliable in terms of bank secrecy and privacy.
The origins of Swiss federal laws to protect the offshore banking secrecy can be traced to 1916. All these guarantees determined many people to deposit their financial means in Swiss banks and all this thanks to the well-known competence and integrity of Swiss bankers, the financial services that Swiss banks can provide for their clients, freedom from exchange controls, government ‘s interference in banking activities.