Switzerland is ranked number one as the world's largest private banking center with over 500 major banking institutions. It is estimated that around 35% of all the private wealth globally is held in Switzerland. Recent years have seen the Swiss banking services market move to sophisticated services a competitive prices for  large professional clients. This marked change from the traditional smaller sized private accounts is the result of new legislation and market forces combined. The legislative changes is partly down to the Swiss desire to be seen as a major player in the war against organized crime and money laundering within the international community.

The FBC or Federal Banking Commission regulates the Swiss banking sector and is responsible for licensing the banks. The legal definition of banking includes all deposit-taking activity but crucially does not include the issuance of bonds of securities trading. The offices, branches, agencies and representatives of foreign banks are all governed by the Banking Law of 1934, which was last amended in 1999.

 The Banking Law and the FBC's regulations ensures secrecy with stringent provisions that play an important role in the appeal of Swiss banks to investors and depositors. These provisions have limited exceptions as detailed in the domestic and international legislation adopted by Switzerland as part of its efforts to join the campaign against money-laundering and international organised crime.

The Money Laundering Act 1998 and the Federal Act on International Mutual Assistance in Criminal Matters 1983 are the key new pieces of legislation. The former in particular is considered extremely effective in allowing penalties of up to USD 7,000,000 for non-compliance. In the first six months of it in effect, a total of USD 124,000,000 worth of assets were seized. In 2004, additional new anti-laundering laws came into effect and this ended the legendary numbered account in its traditional formed as the regulations came into force in June. Entirely anonymous money transfers abroad were stopped in 2003 and the one year transition period ended June 30, 2004.

The EU began negotiating with Switzerland in early 2001 in an attempt to reach an agreement for sharing information as required by the EU's own withholding tax directive. It would have been ineffective without such as agreement.

Despite the EU declaration stating the Savings Tax Directive was finalized in early 2003, not least in terms of its own members, the EU was trying to bring about a 'Bilaterals II' agreement dependent on dilution of the Swiss banking secrecy throughout negotiations between Brussels and Switzerland at the end of the year. Predictably, the Swiss refused to consider the process of legislating for the Savings Tax Directive and Bilaterals II made no further progress at this time.

The EU by means of public statements from EU ministers continued to exert pressure urging Switzerland to change its stance through until February of 2004. The Swiss Finance Minister at the time, a Mr Hans-Rudolf Merz was not willing to relax the issue of separate negotiations in regards to security co-operation and tax fraud, both part of the Bilaterals II agreement. From an early stage Switzerland insisted on an opt-out for judicial co-operation and continued to remain firm on the issues with the Savings Tax Directive. The Swiss insisted that a compromise must be reached on the judicial issue before they were able to sign up for the measures.

 Such a compromise over the requirement for information exchange and judicial co-operation in regards to international crime was eventually reached in May 2004. The Swiss managed crucially to stay exempt from providing any assistance in cases revolving around fraud of direct taxation. For all other matters, Switzerland had agreed to provide legal assistance (the terms of which were contained in the Schengen agreement) for cases relating to indirect taxes, for example customs, VAT and alcohol and tobacco levies.

 The Swiss were now able to accept the Savings Tax Directive but this was not implemented until July 2005 in order to allow time for the democratic process in Swiss parliament to draw up the necessary legislation. Robert Waldburger, the chief international tax negotiator for Switzerland warned "From the Swiss point of view, it's impossible that the January 1 2005 date will work. If everything goes really well, parliamentary approval in Switzerland will take 12 to 14 months."

By November 2004, Switzerland indicated that a referendum regarding the Savings Tax Agreement was unlikely but the legislation necessary to approve incorporating the Directive and the Bilaterals II agreements was proceeding. Gerrit Zalm, the Dutch Finance Minister explained “The Swiss minister made us happy by informing us that everything was well underway with the savings (tax) agreement" after a regular meeting of finance ministers from countries in the European Free Trade Association (EFTA).

 Merz was present at the EFTA meetings and dismissed doubts over the implementation of the directive arising from the possibility that the Swiss government may have been obliged to allow a referendum over the treaties. He assured ministers this was not the case as Zalm revealed: “He did not expect a referendum in Switzerland on this issue, so that was a very comfortable communication from his part"