The legend of Swiss banking accounts is centered around the famous (or infamous) “numbered accounts” which is seen as the ultimate in financial confidentiality.  While numbered accounts do exist, they are still bound by the laws which govern bank-client confidentiality in Switzerland.

Understanding Swiss Banking Privacy

To some extent, Swiss banking privacy is no different from the established confidentiality agreements between any bank and its clients.  The primary difference is that the privacy of accounts is considered sacred in Switzerland, established by traditions dating back over 300 years and institutionalized by Article 47 of the Federal Law on Banks and Savings Banks, which took effect in 1934.

Under the law, anyone acting in any capacity as a member of a banking body (whether auditor, liquidator, employee or agent of a bank), as an employee or member of an accredited auditing institution or a Swiss Federal Banking Commission observer, is not permitted to reveal information entrusted to them because of their position with severe penalties imposed on anyone breaking the law.

Although the law refers to “banking secrecy,” keep in mind that the law is intended to protect the client’s privacy – which stems from the Swiss’ attitude that governments have no business prying into an individual’s private life or business, a position extended to everyone.  There is no limitation, under Swiss law, for a foreigner to open a bank account in Switzerland.  Article 47 was put in place in order to prevent foreign governments (at the time, the Nazi regime in Germany) from harassing their citizens who had Swiss bank accounts.

Limitations on Banking Privacy

Swiss banking privacy is based on the principle of an individual’s right to privacy; Swiss law and tradition extends this right to private banking information.  The only exceptions to this rule are in cases involving serious crimes such as terrorism, narcotics trafficking and gun smuggling.  In such cases, the banks are under obligation to inform authorities if they suspect such activities with their clients; at the same time, legal remedies exist to compel banks to provide information about these accounts.

Swiss “Numbered Accounts”

The numbered account is considered the ultimate in banking confidentiality, since only a limited number of people are allowed access to the numbered account holder’s personal information and identity.  An assigned number replaces your name in all documents relating to your account; transactions are also subject to certain restrictions in order to maintain security.

Keep in mind, however, that numbered accounts are not anonymous.  The bank requires identification documents to open a numbered account; as noted, however, only a handful of people can access your personal details once the account is established.

Numbered accounts are more expensive to open and maintain than regular accounts because of the procedures involved to ensure that secrecy.