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The SWIFT Affair

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Johannes Köppel

2. The Implications of the SWIFT Affair for Switzerland

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2.1 The origins of Swiss banking secrecy

1In order to fully understand the impact of the SWIFT surveillance affair on Switzerland, an assessment of the origins and development of Swiss banking secrecy is necessary.

  • 28  Article 47 of the Swiss Banking law of 1934 reads as follows: Any person who, in his or her capaci (...)

2Switzerland’s worldwide reputation as a rich country of bankers is often displayed as being related to one single passage in Swiss law, the famous Article 47 of the Swiss Federal Banking Act that was introduced on 8 November 1934.28 Article 47 obliges banks to keep customer data secret. Bank employees violating Article 47 can be imprisoned for up to six months or fined.

3Over the course of the last century, two different types of myths have surrounded the establishment of Article 47, and both are incorrect. On one side of the spectrum, there is the assumption that the Swiss Banking Act was passed as an act of “humanitarian compassion” to save Jewish assets from German prosecution. In 1966, the bank “Schweizerische Bankgesellschaft” (nowadays UBS) introduced this myth in an expert journal. At that time, pressure on banking secrecy by US authorities was considerable and the myth helped Swiss bankers to defend banking secrecy. The anti-Nazi myth was equally used as a political argument in 1984, when the Swiss voted on a popular initiative that wanted to abolish the strict banking privacy laws. Interestingly, it was used by both proponents and opponents of the initiative. The myth persisted and even in 1996, The Economist wrote: “Many Swiss are proud of their Banking Secrecy Act, because it has admirable origins (it was passed in the 1930s to help persecuted Jews protect their savings)”. (The Economist 1996)

4At the other end of the spectrum is the myth that tax evasion has been at the core of the establishment of the banking secrecy legislation in 1934. According to this view, Article 47 opens the possibility for tax evasion, so tax evasion was the sole and only motive behind the enactment of Article 37 by legislators in the early 1930s. This view considers that the 1934 act was an “aggressive fight for taxpayers’ interests”. (Hug 2000) Through a historic-political analysis, the following section will explore the origins and show that neither of these underlying myths were the principal factor leading to in the establishment of formal Swiss banking secrecy.

5Despite ongoing controversy, surprisingly little historical or political research has been conducted on the origins of Swiss banking secrecy laws. There exists a wide array of legal studies and journalistic works, but little substantive research. Only three scholars have published repeatedly on this subject. One is Professor Sébastien Guex from the University of Lausanne. Professor Guex has published several articles that are highly critical of banking secrecy and advocates the abolition of banking secrecy all together. (Guex 2000) Historian Peter Hug argues along similar lines with Guex. (Hug 2000)

6On the other side of historical interpretation is Robert U. Vogler, a historian who has worked for the last 20 years at UBS. Despite his deep affiliation with banks, he has published a very complete and detailed book on the subject. (Vogler 2005) Apart from the fact that Vogler constantly downplays the importance of tax evasion for Swiss banks, the study is surprisingly balanced.

7Already in the nineteenth and early twentieth century, the rule of secrecy was deeply rooted in Swiss banking activities. Privacy commitments were at that time based on commonly accepted traditional practice, not on concrete law. Nevertheless, there existed several laws that could be used as a legal basis for strict confidence in the banking sector, but they remained fluid.  However, all law that covered banking secrecy stemmed from civil, not criminal law. Therefore, its violations could potentially be challenged in civil, rather than criminal, proceedings. It was therefore only possible to impose sanctions if the injured party filed a claim. Despite these legal weaknesses, banking secrecy was practiced and tax authorities in particular found it difficult to penetrate it.

  • 29  The author uses the word “socialist, following the French term “Parti Socialiste Suisse”. However (...)
  • 30  Interestingly, the Swiss reaction to the current financial crisis was very similar. One of the mea (...)

819th century liberalism dominated the political decision making process in Switzerland after the turn of the century and prevailed until the First World War, despite increased opposition. The political situation in Switzerland, as elsewhere in Europe, was marked by the rise of the socialist party.29 Inherent in their political agenda of social justice was the call for strict banking regulation. This demand was fuelled by several severe financial crises in the first half of the 20th century. As in many other countries, modern Swiss banking regulations resulted from banks getting into trouble. Switzerland experienced a first wave of financial collapses from 1910 to 1913. In the decade preceding World War I, 85 Swiss banks ceased to exist. (Vogler 2005) This led to popular demands for stricter regulation of the traditionally very liberal Swiss banking sector. Especially the left-wing socialist, as well as the farmer party, pressed for governmental protections for savings and investments.30 As a consequence, several propositions for banking legislation were introduced before the First World War, but all were rejected by the radical-liberal party, which still had the absolute majority in the Swiss parliament.

9The political environment in Europe in the interwar-period was marked by an extreme density of political events. European boundaries were re-drawn, socialists gained power in Russia, and Germany experienced hyperinflation. This created a general climate of uncertainty amongst conservative elites in Switzerland. The fear of civil unrest and the loss of Swiss sovereignty were omnipresent. The formal establishment of Swiss banking secrecy must be seen in this historical context, which was also marked by financial espionage. Germany, for example, tried in 1931 to bribe employees of the Swiss Banking Union in order to obtain information about assets and portfolios belonging to German clients. The German agent was subsequently expelled from Switzerland.

  • 31  Banking Secrecy is facing similar pressure nowadays. Espionage methods were used by Germany, when (...)

10However, during the interwar-period it was not Germany, but rather France that tried the hardest to evade Swiss banking confidentiality. On the one hand, France feared tax evasion. But of more importance politically was the assumption that Germany was hiding large amounts of capital in Switzerland, and it was therefore not assuming their reparation payments that were imposed in the 1919 Versailles peace treaties. The most telling example of that pressure can be found in the 1932 “Paris Affair”. Two employees of the Basler Handelsbank (BHB), one of the five leading Swiss Banks at the time, were arrested in Paris during a meeting with potential clients. French authorities found in their suitcase a list with over a thousand clients. Among these clients were “three French senators, a dozen generals, two bishops, former ministers and leading industrialists like the Peugeot family”. (Guex 2000) As a consequence, France tightened pressure on Switzerland to reveal a complete list of French clients, including threatening to use espionage as a means of self-help.31 The situation dramatically changed when the French center-left government was forced to resign in December 1932. Such attempts to breach a country’s sovereignty were clearly perceived stronger in those times of political uncertainty than nowadays. While the Paris affair can help explain the support for codification of banking secrecy, other events were much more decisive for the establishment of the Swiss Banking Act legislation and with it the banking secrecy article.

  • 32  The current UBS rescue plan is injecting 6 billion Swiss Francs. On top of that, the Swiss Governm (...)
  • 33 The sequence of events do not match this hypotheses either. The first drafts of the Banking Act con (...)

11During the worldwide financial crisis of the 1930s and the massive collapse of German banks, Swiss banks were also strongly affected. This led to a large governmental rescue plan and to the decision for formal financial supervision. The Schweizerische Volksbank” (SVB), one of the biggest Swiss banks, was the worst hit. (Vogler 2005) Due to their heavy exposure in the German market, SVB began to struggle in 1931. Three quarters of their foreign assets were blocked in Germany. When this information went public, a bank run began. With the help of the Swiss Central Bank and the government, the bank survived the initial panic. But from 1931 to 1933, clients continued to gradually withdraw a total amount of 30% of all client savings. The situation became so critical that the Swiss government and the central bank had to initiate a rescue plan. They injected a 100 million Swiss Francs into SVB. The rescue plan was worth roughly one fourth of the annual Swiss government budget. In other terms, this meant that the rescue plan was worth around 10 billion Swiss Francs in today’s currency. The similarities with the 2008 UBS rescue plan are striking.32 This event was the major catalyst that accelerated the political process for a formal financial supervision in Switzerland. Until then, the prevailing liberal ideology dominated Swiss politics in financial matters, preventing state regulation. It was considered that the best way to govern the financial market was through self-regulation by the banks. But in 1932, the liberal party threw their doctrines overboard and acknowledged the need for clear rules to be established and overseen by the government. Even Swiss banking representatives changed their minds, realizing that they might not survive without the state. (Vogler 2005) It was only possible to justify the massive rescue plans to the public if the banking system was put under visible supervision. The same phenomenon that was observed in 2008 occurred in the 1930s: banks and financial institutions changed their attitude towards state intervention almost overnight, welcoming a massive capital injection and bail out plans. The formal establishment of banking secrecy in Switzerland was therefore clearly a regulatory reaction to a banking crisis, eventually fuelled by fears of foreign espionage. The hypotheses that “humanitarian compassion” for Jews in Germany was at the root of Swiss banking secrecy must be dismissed as false.33 So must the assumption that tax evasion was the sole and unique purpose for the introduction of banking secrecy regulations. The Article 47 on secrecy was nothing revolutionary but rather a continuation of current banking practice, merely a by-product of much broader banking regulation. Nevertheless, Article 47 provided a cornerstone for the success of modern Swiss banking, although probably few of the legislators at the time were aware of it.

  • 34  This still holds true today. Banking secrecy has little to do with the financial crisis of 2008. N (...)

12The Swiss Federal Banking Act was approved by the Swiss parliament on 8 November 1934 by 119 to 1. The verdict was overwhelming; a broad political consensus existed on the need to regulate the banking system. In the whole discussion on the new regulatory system, Article 47 on banking secrecy was present in the initial draft and remained unquestioned. (Guex 2000) It clearly played a secondary role and was not at the heart of the reform process, probably in part because banking secrecy had little to do with the stability of the financial system.34 The whole debate was about regulatory details such as the licensing of banks, supervision, clear rules for governing bodies, accounting and disclosure. Indeed, during the whole parliamentary debate, Article 47 was not mentioned once.  That is all the more surprising since the socialist party had traditionally been a fierce opponent of strict banking confidentiality. In their class struggle, social justice and fair taxation has always been an essential political demand. Already in 1920, the socialists directly challenged Swiss banking secrecy in their party’s political agenda. They called a vote in parliament stating that “all banks are obliged to give the taxation authorities all information required and are to comply with all controlling obligations.”  Although this proposal was rejected in parliament, it gained the support of over one third of elected senators. In 1922, the socialists launched a popular initiative called the “wealth tax initiative”. This tax was supposed to replace the existing “war tax” that was imposed to balance the deficit budget that Switzerland, like most countries, had acquired during World War I. The initiative would have required all Swiss banks to open their accounts to tax authorities. 85% of the Swiss population rejected the initiative. The opponents of the initiative argued with the exact same arguments as liberal politicians argue today: if secrecy were abolished, capital would flow out of Switzerland, thereby adversely affecting the economy.

  • 35  This explanation has been questioned by Vogler, arguing that such a deal amongst political parties (...)

13After all, Article 47 amounted to a strengthening of banking secrecy because it made banking secrecy part of criminal law. So why had the socialists in parliament not tried to oppose or weaken Article 47 of the Banking Act? Several explanations have been offered. According to ane explanation, provided by Vuex, rather than only opposing banking secrecy, the socialists had been fighting a much larger battle for banking regulation. The socialists wanted a minimal savings protection by the state and clearly defined rules for banks. The financial crisis had provided them a unique opportunity to achieve their goal. In 1934, just months before the vote on the Banking Act, the socialist party tried to abolish banking secrecy, but the parliament clearly rejected their proposal once again. (Hug 2000) The socialists therefore knew that the other political parties would probably have rejected the whole Federal Banking Act had Article 47 not been part of it.35

14Another explanation, provided by Vogler, is that even the socialists acknowledged the danger of foreign espionage. This scenario seems unlikely to the author, although it is not hard to imagine the sensitive nature of the issues of sovereignty and privacy protection for the socialist party just after Hitler had taken power in neighbouring Germany.

  • 36  Swiss Minister of Finance, Hans-Rudolf Merz, used to be a UBSbanker. Oddly enough, the former Swis (...)

15Based on observations about the 2008 financial crisis, the author offers an additional factor of explanation for the socialists’ acceptance of banking secrecy in the 1934 Swiss Banking Act: the socialist party, as opposed as they may have been to banking secrecy, simply lacked the institutional capacities to influence the legislative process in their favour. In the 2008 bailout of the Swiss bank UBS, it is appears that no member of the socialist party was involved in the elaboration of the rescue plan. The rescue plan was drafted and de facto implemented by the Swiss Banking Commission and the Swiss central bank. All key positions in those financial bodies are held by people with close ties to the financial industry. Even the Federal Department of Finance only played a secondary role. (Gmür 2008) The Swiss parliament, where the socialist party actually held a relatively strong position, debated on the topic only two months after the rescue plan was decided and implemented. The parliament had no choice; it could only nod through the rescue plan since the money had already been committed. Contrary to the US Senate, the Swiss political system does not require the prior consent of parliament for a bank bailout. The Swiss socialists have nowadays probably more financial expertise than they had in the 1930s. But even today, new Swiss banking regulation that might emerge from the financial crisis will not be written by the socialist party. Regulations will be written by stakeholders of the financial industry, like the Swiss financial oversight committee Finma, presided by Eugen Haltiner. He is a former UBS director, a friend of the Swiss Minister of Finance Hans-Rudolf Merz36 since their days as junior bankers at UBS. (Städler 2009)

16The same holds true for the turbulent political situation in 1934 and the elaboration of the Swiss Federal Banking Act. The expert panel debating over the draft of the Swiss Banking Act in 1933 consisted of people such as Adolf Jöhr, president of SKA, one of the major Swiss banks. (Vogler 2005) Since the socialists held few key positions and therefore had very little influence on the legislative process, they were unable to effectively oppose or weaken Article 47 on banking secrecy in 1934.

2.2 The importance of secrecy for Swiss banks over time

17While academic research on the origin of Swiss banking secrecy is scarce, reliable published research with hard figures on the importance of secrecy for Switzerland’s evolution to one of the major asset management nations is inexistent. Until 1999, no data was available on the amount of assets managed by Swiss banks. Every bank’s major secret was their statistic on “assets under management”. (Vogler 2005) But even if data was available, it would be difficult to evaluate if banking secrecy was decisive for Switzerland as the location of choice.

  • 37  Interview with high-ranking former director from one of the two major Swiss banks.

18Swiss banking secrecy has repeatedly been under attack for over 100 years. Therefore, every major bank has established business scenarios of how many assets they would lose in case that banking secrecy fell.37 However, it is very unlikely that those estimations will ever be made public, even historical data.

  • 38  As explained in detail in Vogler, 2005.

19Despite the lack of hard figures, some assumptions can be made from the historical context in which Swiss banks have been operating. It is generally undisputed that secrecy has gradually gained importance for Swiss banks over the last 80 years. Besides secrecy, however, three other factors also have greatly contributed to the rise of Switzerland as a banking center.38

  • 39  “Bürgerliche Parteien” is often translated as non-socialist parties. In the first half of the 20th(...)

20First, Switzerland has an exceptional history of political stability. Since 1890, the political power has stayed with the same predominant political group, the “bürgerlichen Parteien”.39 Switzerland has been the only country in continental Europe which did not experience major changes in its political system over the last hundred years. Closely linked is the stability of the Swiss legal system. Political stability often directly translates into security of possession, which is crucial for an asset-managing country. Particularly in the first half of the 20th century, this was undoubtedly a comparative advantage.

21Second, the Swiss franc has been an extremely stable currency with very low rates of inflation. While Switzerland’s economic development resembles other Western industrial nations, there is one important difference: Switzerland was not directly affected by the devastation of two World Wars. Especially between 1914–1948, Switzerland was the best place to protect your assets against inflation. Switzerland, even before the establishment of formal banking secrecy and despite relatively low Swiss interest rates, profited from inflationary developments in surrounding countries. The same holds true for the period after the abolishment of the gold standard in the 1970s. Switzerland’s annual inflation during the 1970s was much lower than most other Western countries. The 1970s were also the period during which the Swiss asset management business underwent the fastest rate of growth.

  • 40  Throughout the Second World War, the Swiss franc was the only convertible currency besides the US (...)

22Third, the Swiss franc was freely convertible.40 Especially after the Second World War, Swiss banks profited from the currency restrictions by most Western European countries. Even in the 1980s, almost 80% of all countries were still imposing some type of currency restriction. Free convertibility of currency is a precondition for attracting foreign assets.

23However, the abovementioned comparative advantages have gradually disappeared over time because other financial centers nowadays offer similar conditions. Thus, secrecy has become a very important location factor for Swiss banks.

24While there is agreement on the gradual gain of importance of secrecy, the opinions differ on the overall influence of secrecy. Has banking secrecy since the 1930s been the sole factor for the success of Swiss banks, as presented by Hug (Hug 2000), or was it on the contrary only a “minor secondary factor” as presented by former UBS historian Vogler? The truth probably lies somewhere in between. Roughly three trillion dollars in private assets are managed in Switzerland. How much of that money would have been attracted by Switzerland without strict secrecy that allowed tax evasion? No bank will comment on the subject, and external estimations are not much accurate than guessing. Statements from financial actors are rare, but Konrad Hummler, the director of the private bank Wegelin, nevertheless commented on the subject. He stated in 2008 that probably half of the three trillion dollars managed in Switzerland have “a special need for discretion”. (Richter 2008)

25Secrecy is not the sole success factor of Swiss banks. After all tough banking secrecy laws also exist in other countries. And secrecy was less important in the past than it is today, since other countries have matched the other comparative advantages. Secrecy has from the very beginning been an underlying necessity, but it is not the sole reason for the extraordinary growth of Swiss banking.

2.3 The limits of Swiss banking secrecy and current developments

26Swiss banks have the Hollywood reputation of being bulletproof fortresses. Anonymous numbered accounts still come to mind when people worldwide are asked for associations with “Switzerland”. However, Switzerland has been gradually forced to limit its banking secrecy over the last 30 years. Pressure on banking secrecy has come from both internal and foreign sources. The internal efforts to limit banking secrecy, however, were never successful. The best example is a popular initiative in 1984 to restrain banking secrecy. It was rejected by 73% after banks lead the most expensive political campaign ever. (Strahm 2009) Switzerland’s concessions on secrecy rules have always been a response to US (and in recent years European) pressure.

27The first limitation on Swiss banking secrecy was the “Mutual Legal Assistance Treaty” with the US in 1974. After Nixon threatened to take retorsion measures against Swiss banks, Swiss cheese and Swiss watches, Switzerland relaxed secrecy rules on financial data related to organized crime. (Knollwolf 2009) In 1988, the US announced the imposition of heavy fines against the UBS and Credit Suisse if they did not combat insider trading. Since Switzerland had no legal ground to deliver information on insider trading to the US, Switzerland first had to introduce a new law against insider trading, and subsequently to enlarge the legal assistance treaty to comprise insider trading.

  • 41  This concession came after a long campaign against Swiss Banks for their actions during the Second (...)

28In 1998, Switzerland introduced its first anti-money laundering legislation and concluded a new double taxation agreement with the US. This agreement established that legal assistance would be delivered in “tax fraud and tax fraud-related cases”.41 In 2001, Swiss banks doing business in the US were forced to sign the “Qualified Intermediary Agreement” which forces banks to reveal the identity of people receiving interest payments on US securities to US authorities.

  • 42  The anti-money laundering regime is also mainly a US initiative. (See Levi and Reuter 2006)
  • 43  This was a direct result of FATF recommendations that were issued after 9/11. See also: (2007). We (...)
  • 44  (2005). FATF – Third mutual report on anti-money laundring and combating the financing of terroris (...)

29The legendary Swiss numbered accounts, however, were not eliminated by the bilateral US treaties, but by the worldwide anti-money laundering regime that was established over the course of the last 20 years.42 Since 2002, every international transaction must contain the name and the address of both sender and recipient.43 This was the end of Swiss numbered accounts. A new directive that entered into force in 2008 states that now even the actual IBAN account number of sender and recipient must be included in the message. The 40 FATF anti-money laundering recommendations and the nine added anti-terrorism financing recommendations were, in comparison with other countries, appropriately implemented by Switzerland.44 Thus, in Switzerland, long regarded by anticorruption campaigners as the pinnacle of money laundering centers, even hotels that offer money exchange facilities are nowadays subject to the anti-money laundering regime. (Levi and Reuter 2006)

  • 45  (2009). A Progress Report on the Jurisdictions surveyed by the OECD global forum in implementing t (...)
  • 46  Interview with the former state prosecutor responsible for tax evasion.

30Recently, pressure from the European Union against tax evasion has risen, led by neighboring Germany, France and Italy, which suffer the most from untaxed assets flowing into Switzerland. In 1986, the OECD established the “OECD Model Tax Convention” which defines international standards for cooperation on tax matters. Cooperation between states on tax matters is often integrated in bilateral double taxation treaties. Switzerland has double taxation treaties with roughly 80 countries, but none of those treaties fulfill the OECD standard. The OECD standard requires states to grant legal assistance in cases of tax evasion, and that the tax legislation of the country requesting the assistance determines the scope of the assistance.45 For over 20 years, Switzerland has successfully refused to accept the OECD Model in cases in which the other country’s tax legislation constitutes the basis for legal assistance. In all current bilateral treaties ratified by Switzerland, Swiss law determines whether a foreign bank customer acted illegally in his home country. In Switzerland, simple tax evasion is a non-indictable offence but not a crime; only active tax fraud constitutes a crime. Therefore, Switzerland will not grant legal assistance unless the demanding country can prove active tax fraud by a bank customer. Proving active tax fraud is difficult and time-consuming, which explains why legal assistance is rarely granted by Switzerland.46

31In the wake of the 2008 financial crisis, many countries have cracked down on tax havens. OECD countries announced economic sanctions against all countries not fulfilling the “OECD Model Tax Convention”. Between December 2008 and March 2009, practically all tax havens (Lichtenstein, Andorra, Luxembourg, Austria, Hong Kong and Singapore) signaled that they would accept the Model Convention. Switzerland remained isolated as the last non-cooperating country until the Swiss Federal Council announced on 13 March 2009 that Switzerland would renegotiate all of its tax treaties in order to comply with the OECD Convention. This renegotiation is now in process. Switzerland will have to abandon the difference between tax evasion and fraud for foreign bank customers. But how far Swiss willingness for cooperation will extend in practical terms is uncertain. Another uncertainty stems from the unpredictability of Swiss direct democracy: a referendum on the renegotiated tax treaties will be held. In any case, an assessment of these recent developments will only be possible once the new legal assistance system is established. This will not be the case before 2011.

32However, it is to be anticipated that Switzerland will give as few concessions as possible. (Aschinger 2009) Switzerland is also trying to delay the process. Instead of engaging in complicated renegotiations of double taxation treaties, Switzerland could simply sign additional protocols to each treaty (Belgium has chosen this avenue in order to comply with OECD standards). This would enable Switzerland to comply with the OECD tax standard much faster. Instead, Switzerland is now renegotiating entire double taxation agreements. Thus, it must be assumed that the Swiss government is deliberately trying to gain time. (Parma 2009)

  • 47  NZZ is the leading Swiss business newspaper with close ties to the financial actors. It is the onl (...)
  • 48  “da wieder Zeiten kommen können, in denen die seriöse und korrekte Geschäftsführung und Diskretion (...)

33Already in 1970, when Switzerland was negotiating the first treaty that limited banking secrecy, the NZZ47 argued that Switzerland should only make minimal concessions “because in the future, the sincere and discrete asset management and privacy protection of Swiss banks will once again be more appreciated.”48 This argument explains the highly defensive attitude of Swiss banks concerning banking secrecy. The common assumption is that there is a worldwide market for tax evasion which is fluctuating. In times of economic crises, this market dries up and tax havens have to make concessions, but during more prosperous times, this market opens up again and states fight tax evasion less rigorously. Thus, Swiss financial authorities are conceding as little as possible in order to maintain their pole position and because they believe that the tax evasion market is going to flourish again.

  • 49  The only exception is the “Zinsbesteuerungsabkommen” with the European Union. This is the only cas (...)
  • 50 Bundi, A. (2009). Dem Finanzplatz treue ergeben. Tagesanzeiger. Zürich, TA Media.
    See also: ti. (200 (...)
  • 51  The public outrage over the bailout plan is so far limited to indignation at excessive salary of t (...)

34In every instance where Switzerland has conceded some element of banking secrecy, this was not triggered by a conscious, independent decision by the Swiss government adopted contrary to the will of the banks.49 Rather, it was mostly UBS and Credit Suisse, the two major Swiss banks, which requested the government to relax secrecy laws because of the threat of retaliatory measures against their US businesses that would be adopted in cases of non-cooperation. (Bundi 2009) Over the last 30 years, the Swiss government has acted in financial matters mainly as the spokesperson of the financial sector.50 This stems from a deeply rooted belief held by a majority of Swiss people that what is good for Swiss banks is good for Switzerland. Somewhat surprisingly, this attitude seems not to have fundamentally changed after a huge bailout plan for UBS became necessary in 2008.51

2.4 SWIFT surveillance and Swiss banking secrecy – the Swiss reaction

  • 52  Interview with high-ranking former director from one of the two major Swiss banks.
  • 53 (2007). Weitergabe von Daten internationaler Finanztransaktionen durch SWIFT: Eine Beurteilung aus (...)
  • 54  Interview with high-ranking SWIFT official, summer 2008. (see also Schletti 2006)

35Due to its strict banking secrecy laws, the SWIFT surveillance takes on special importance in Switzerland. Despite the secret character of the SWIFT surveillance, multiple Swiss actors knew about it from the beginning. Both major Swiss banks, UBS and Credit Suisse, have the right to appoint one of SWIFT’s directors. Therefore, both banks had detailed knowledge about the surveillance since 2001.52 The Swiss National Bank (SNB) was also informed in 2001 by SWIFT.53 SNB subsequently informed the Federal Department of Finance and the Swiss Banking Oversight Commission. The topic of data surveillance by US authorities was also mentioned during the annual conference of “SWIFT Switzerland” in 2002 where actors from other Swiss banks were present.54

  • 55  Interview with high-ranking SWIFT official, summer 2008.
  • 56  Swiss banks presented the “agreement on taxation of interest payments from foreign assets” to the (...)

36From 2001 until 2007, neither the Swiss banks involved nor the authorities took steps to secure better data protection of the SWIFT surveillance.55 This is remarkable considering that throughout this period, Swiss banks fought an expensive political battle in the name of data and privacy protection to ensure that the Swiss people would vote for the bilateral agreements with the EU.56

  • 57 “Sapless and powerless Swiss banks in regards to the SWIFT Affair” (ti. 2006)
  • 58  In German “Geschäftsprüfungskommission (GPK)” or “Commission des gestions d’affaires (CdG)” in Fre (...)
  • 59 (2007). Weitergabe von Daten internationaler Finanztransaktionen durch SWIFT: Eine Beurteilung aus (...)

37In the first days after the New York Times revelation of the surveillance, Swiss banks downplayed both the problem and their knowledge about the surveillance. (Schletti 2006) The media and many politicians were unhappy about the no-comment policy of the banks. Even the NZZ, a newspaper with close ties to the financial industry and usually a fierce defender of banking interests, included a headline which read: “Saft- und kraftlose Schweizer Finanzwelt in der Swift-Affäre”57. Two weeks after the revelation, on 7 July 2006, the control committee of the Swiss parliament58 demanded explanations from the Swiss government, the Federal Council, on whether the SWIFT surveillance violated Article 47 on banking secrecy and therefore Swiss sovereignty.59

  • 60 (2006). Einsicht von US-Behörden in Daten des internationalen Zahlungsverkehr und Implikationen für (...)
  • 61  Interview with high-ranking director of the Swiss National Bank, summer 2008.

38Two months later, the Swiss government, the Federal Council, replied. (The Federal Department of Finance wrote the reply, mainly based on information received by the Swiss National Bank60) In a letter that was published on the internet,61 the Federal Council stated that the surveillance concerned only international transactions and was therefore unproblematic. According to the Federal Council, Swiss banking customers cannot expect the protection of their financial data if they carry out international transactions. This protection is limited to Switzerland. Therefore, no violation of Swiss sovereignty took place. The Federal Council did not pronounce itself on the question of whether the banks had violated their obligation to inform their customers about the surveillance and left it “to the civil courts and the Data Protection Commissioner to answer that question”.

  • 62  “Zu diesem Schritt haben den Bundesrat u.a. rechtliche Gründe bewogen. See (2008). Swift, wirtsch (...)
  • 63  The proceeding was criticized by Senator Dick Marty and Luc Recordon. See Ibid.

39Despite the assurances by the Federal Council, the Swiss Federal Prosecutor started a pre-investigation for a possible violation of banking secrecy and foreign espionage laws. The Swiss Federal Prosecutor demanded the necessary agreement for a full investigation from the Federal Council in March 2007. In January 2008, after ignoring the demand for almost a year, the Federal Council blocked the investigation “because of legal reasons, amongst others”.62 A few Swiss senators63 have criticized the proceeding of the Swiss government in parliament in May 2008, but the matter did not receive enough political support to be pursued further.

  • 64  (2006). Access to SWIFT Transaction Data – Opinion of the Federal Data Protection and Information (...)

40The Swiss Data Protection Commissioner issued a report in October 2006 which was largely based on the report of the Belgian Privacy Commission.64 He concluded that the banks “failed to provide appropriate information” and noted that “the duty to inform applies even if there is merely a possibility that a third party may gain access to SWIFT data.” However, he left it in the open whether an infringement of Swiss banking secrecy laws had occurred, leaving the question for the courts to answer.

  • 65 (2007). Weitergabe von Daten internationaler Finanztransaktionen durch SWIFT: Eine Beurteilung aus (...)
  • 66 “Dies zeigt aus Sicht der Kommission auf, wie beschränkt letztlich das schweizerische Bankgeheimnis (...)

41After receiving the Federal Councils letter, the Control Committee of the Swiss parliament issued an extensive report on the SWIFT surveillance in April 2007.65 The committee stated that Swiss data protection laws had been violated and that the government had been too passive in protecting the privacy of its citizens. It urged the government to find a political solution with the US to ensure accurate data protection of the SWIFT surveillance. With respect to banking secrecy, the commission acknowledged and accepted the assurances given by the government that Article 47 has not been violated, since no protection can be assured for international transactions. The commission wrote that “this [the SWIFT surveillance] shows how restricted Swiss banking secrecy ultimately is.”66 Furthermore it concluded that the banks had failed to dutifully inform their customers. The Commission suggested that banks should be forced to inform their customers about the SWIFT surveillance and limitations of banking secrecy in international transactions.

  • 67  Interview with the responsible official for the SWIFT surveillance in the Office of the Federal Da (...)

42Facing criticism by the Control Committee, Swiss banks decided to act. In autumn 2007, Swiss banks sent a letter to every customer. The letter informed customers that “FATF regulations required the name and address of the account holder to be supplied when making cross-border payments.” (examples of letters in Annex 4). This step satisfied the Data Protection Commissioner, since “transparency has been established, which is our main concern.”67

  • 68  For details on the EU-US accord see chapter 2.5

43The Swiss government, after the criticism by the Control Committee, started negotiations with the US on the SWIFT surveillance. Subsequently in 2008, the US conveyed to Switzerland the same assurances that they had given European Union countries in the agreement of 27 June 2007.68 (Sonntag 2008) (For details on the EU-US agreement see chapter 2.5). However, Switzerland, unlike the EU, does not have a possibility to verify the assurances, and instead relies on good faith.

2.5 The full amplitude of SWIFT surveillance within Switzerland

44Asked by the parliamentary Control Committee about the amplitude of SWIFT surveillance, the Swiss government stated that the data transfer concerns only foreign transactions. This chapter demonstrates that this is incorrect.

  • 69  Swiss Interbank Clearing has recently been bought by SIX (Swiss Infrastructure and Exchange) and i (...)

45Financial payments within Switzerland are handled through Swiss Interbank Clearing (SIC).69 SIC is the payment system for transactions in Swiss francs within Switzerland and is supervised by the Swiss National Bank. It is located entirely on Swiss soil in order to reinforce data protection and banking secrecy.

  • 70  All information on “remoteGATE” and SIC was retrieved from www.sic.ch (accessed August, 25th 2008)

46In 2000, SIC launched a new service called “remoteGATE”.70 This service allows banks to access the SIC payment system through the worldwide SWIFT network. Usually, a payment within Switzerland is transmitted from the bank directly to SIC. However, an inland payment handled via the “remoteGATE” service first passes through the worldwide SWIFT network before being handled by SIC. This facilitates access for banks to the Swiss inland payment system. The SWIFT message format is the worldwide standard in financial IT-software. SIC uses a proprietary format. Integrating the proprietary SIC standard into a bank’s IT-system can be quite costly. By virtue of “remoteGATE”, banks can cut costs by using their standard IT solution.

  • 71  Phone interview view the sales representative for “remoteGATE” at SIC. The sales representative re (...)

47The service has increasingly gained new users. In 2002, only 26 banks used “remoteGATE” to connect to SIC. In 2008, 112 banks and financial institutions were using “remoteGATE” for transactions within Switzerland. Today, roughly 120,000 payments are transacted every month. Originally, this service was designed for foreign banks to give them a cost-friendly solution to enter the Swiss franc Repo-market for Swap trades. But over the years, more and more small and middle-sized Swiss financial institutions began using “remoteGATE”. Nowadays, half of the users are Swiss financial actors. Typical customers are wealth managers, like those located in the Geneva region. However, SIC does not publish which banks use “remoteGATE”. Apparently, data protection is a concern. Some financial actors renounced using “remoteGATE” since it entails transmitting customer data via the SWIFT network.71

48The amount of payment transactions handled through “remoteGATE” is relatively small, roughly one percent of all Swiss inland transactions and only small financial actors and foreign banks use it. However, every Swiss bank customer is potentially subject to SWIFT surveillance even if his bank does not use “remoteGATE”. A transaction always contains the name and address of both sender and recipient. So even if the customer’s bank does not use “remoteGATE”, the customer has no way of knowing if the same holds true for the recipient’s bank.

  • 72  “Der Zahlungsverkehr über das Swiss Interbank Clearing (SIC) ist nicht tangiert. […] Der innerschw (...)

49The Federal Council’s response to the Control Committee on 23 August 2006 reads as follows: “Transaction made through the “Swiss Interbank Clearing (SIC)” are not concerned [by the SWIFT surveillance]”,“The inland payment transfer system SIC is therefore not subject to the US surveillance program”.72 As shown above, this information given from the Swiss government to the highest parliamentary oversight body, the Control Committee, is incorrect.

50The author transmitted an article with preliminary findings of his thesis to the largest paying Swiss newspaper, the Tages-Anzeiger. The article focused on the above-mentioned misinformation of the Swiss parliament by the government. The article appeared on 10 November 2008 on the front page of Tages-Anzeiger. (see Annex 2) Over the next three days, every major Swiss media outlet picked up the subject. (see Annex 3 and radio interview in electronic annex)

  • 73  Statement made by high-ranking SNB director in interview in summer 2009. The director revoked his (...)

51In an initial press release reacting to the article on 11 November, the Swiss Department of Finance, which issued the misinforming letter, said that they were “not aware of remoteGATE”. While this might hold true for the Department of Finance, the Swiss National Bank must have known about it. The Swiss National Bank acts as the supervisor of SIC and it approved the “remoteGATE” service in 2000. The Swiss National Bank was also involved in authoring the letter.73 The press release further stated that the matter was “negligible”, since only a small amount of inland transactions is subject to US surveillance.

52Swiss parliamentarians, however, were not so amused about having been supplied with wrong information by the government. Following the author’s article, the Swiss parliament debated the matter and asked the Control Committee to investigate. Unlike in 2006, the Control Committee and the Federal Council unfortunately decided not publish their communication.

53Nonetheless, one consequence of the author’s article is known. The yearly report of the Control Committee states that the Committee urged the banks to inform their customers about the real extent of personal data transfer. As mentioned above, banks in 2007 wrote a letter to every customer informing them about the possible limits of banking secrecy. However, banks only mentioned “cross-border payments” and failed to mention that due to “remoteGATE”, a small part of inland transactions would also be concerned. The Control Committee urged them to correct this shortcoming.

  • 74  Information received from by the economic correspondent of the Tages-Anzeiger, May 2009.

54Swiss banks promised to “thoroughly inform” their customers that inland transactions could also be handled through SWIFT. However, no action followed. When asked by a journalist in May 2009 why customers had not yet been informed, banks and SWIFT officials answered that due to the financial crisis, they decided to wait before informing customers in order “not to scare customers even more”.74 The author presumes that banks will hold on to the additional information letter requested by the Control Committee until the third data operation center in Switzerland is operational (see chapter 2.5). This way, banks could then send the letter informing their customers about the true amplitude of SWIFT, but would be able to say at the same time that data protection has been enhanced by virtue of the new operation center in Switzerland.

  • 75  Especially at the Swiss National Bank.

55Although the Swiss Department of Finance claims not to have known that inland transactions were also affected by SWIFT surveillance, some government officials must have known.75 This begs the question: why did they not correctly inform parliament in the first place?

56First, they did not want to weaken the mystique of Swiss banking secrecy. The general public perception is that banking secrecy inside Switzerland is still guaranteed. This also holds true from a legal point of view. The fact that inland transactions are affected by US surveillance might create additional legal responsibilities on banks. More generally, the Swiss government wishes to avoid any discussion on banking secrecy, due in part to a potential loss of reputation abroad.

57The second reason for not thoroughly informing parliament is related to the fact that the Swiss government was completely inactive from 2001 until 2007 with respect to the SWIFT surveillance. It did not take any steps to enhance financial privacy protection. When probed by the Control Committee on this point, the government justified its inaction in 2006 by arguing that Switzerland was too small to make an impact on a global issue like the “SWIFT surveillance affair”. This argument might be true for international transactions.  However, national transactions could have been protected. “remoteGATE” was under the supervision of the Swiss National Bank. The Swiss National Bank knew about the surveillance since 2001 and it could have stopped the use of “remoteGATE”, but refrained from doing so. If the Federal Council had admitted to parliament that Swiss payments are affected and that something could have been done about it, politicians might have criticized the inactiveness of the government even more. Additionally, the parliamentarians might also have demanded the cessation of “remoteGATE”.

  • 76  Statement made by high-ranking Swiss National Bank director in interview in summer 2009. The direc (...)

58As “remoteGATE” allows the surveillance of Swiss inland transactions, so arises the question of whether the Swiss National Bank should have banned this service. How useful would a ban of “remoteGATE” be in practice? “remoteGATE” is only the tip of the iceberg. 20 million inland transactions are handled through SWIFT every year. Only 10% represent payments that are handled through “remoteGATE”. The remainder concerns securities trading, foreign exchange transactions and trade financing. All of those transactions also contain sensitive personal data.76 During the SWIFT affair, public attention was focused only on payment transactions. It was widely disregarded that privacy was also breached in other areas.

59A ban on “remoteGATE” will not “secure” the Swiss financial system and is not advisable. Of greater importance than a ban is transparency: total privacy protection for transactions is not possible anymore, not only in the case of SWIFT. The issue is larger. Many laws and international agreements restrain Swiss banking secrecy which is today far from being bulletproof.

  • 77  Statement made in interview in summer 2009. The director revoked his consent to be cited by name a (...)

60The SWIFT surveillance, tax agreements, anti-money laundering regimes, and far reaching legal assistance have rendered Article 47 on banking secrecy impossible to enforce. Banks can no longer diligently fulfill their secrecy obligation imposed on them by Article 47. Even a high-ranking director of the Swiss National Bank, a fierce defendant of Swiss banking interests, has acknowledged that ”banking secrecy nowadays can only be guaranteed if money stays within one bank. As soon as transactions are made, banks are not able to guarantee secrecy anymore. This means that Article 47 on banking secrecy should be rewritten.” 77 However, banks are reluctant to support a revision of Article 47 since this would be a long process, attract media attention, and it may weaken the mystique of Swiss banking secrecy.

  • 78  As the Private Banker Konrad Hummler called tax evading customers in an interview in 2008. (Richte (...)

61Switzerland as a financial center would not have been harmed to any significant degree if the Swiss government had informed the Control Committee straightforwardly and transparently about the real extent of SWIFT surveillance. It is widely known among banking experts that banking secrecy in transactions can no longer be guaranteed, even if the transaction occurs within Switzerland. Swiss banks have long ago adapted to this restraint: when a wealthy customer with a “special need for discretion”78 opens an account in a Swiss private bank, he will receive two accounts. One for savings, were his fortune is placed. The personal data of this account will never leave the bank. Next to it, the customer will have a transaction account filled with just enough “petty cash”. This way, banking secrecy protects the majority of the customer’s wealth.

62The Federal Data Protection Commissioner also affirms that Article 47 is not practicable anymore. Generally, national legislation on data protection is limited. Many privacy issues can only be solved through international cooperation. But every country has its own interpretation of data protection. Attaining comprehensive international cooperation on data protection, including financial data, is still a long way away.

  • 79  Interview with director of prominent Swiss Private Bank, summer 2008.

63Thus, at the very least, transparency is needed. Banking customers must know the limits of banking secrecy. This is also the opinion of some Swiss bankers, especially private bankers:79 it is best for Swiss banks if the customer completely trusts his banker. This requires that both the public and the customer are fully informed about the limits of Swiss banking secrecy, however limited it may be today.

Notes

28  Article 47 of the Swiss Banking law of 1934 reads as follows: Any person who, in his or her capacity as member of a body, employee, proxy, liquidator or commissioner of a bank, observer for the Banking Commission, or a member of a body or an employee of an authorized auditing firm, has revealed a secret that was entrusted to him or her or of which he or she had knowledge by means of his or her practice or employment, any person who has incited another to violate professional secrecy, will be punished by imprisonment for a maximum of six months or by a fine not exceeding 50,000 francs. If the offender acted in negligence, the punishment will consist of a fine not exceeding 30,000 francs. Violation of secrecy remains punishable even when the practice or employment has terminated or the holder of the secret no longer works in the banking industry. Reserved are the provisions of the federal and cantonal legislation ruling on the obligation to inform authorities and testify in court.

29  The author uses the word “socialist, following the French term “Parti Socialiste Suisse”. However, it is important to note that this party does not promote radical socialism, but is closer to the German idea of Social Democracy. The name of the party in the German part of Switzerland is “Sozialdemokratische Partei Schweiz” (Social Democratic party).

30  Interestingly, the Swiss reaction to the current financial crisis was very similar. One of the measures concluded by the Swiss government in November 2008 was to raise the protection for savings from 30,000 Swiss Francs to 100,000.

31  Banking Secrecy is facing similar pressure nowadays. Espionage methods were used by Germany, when German secret services paid 5 million Euros to buy client information from an employee of a Lichtenstein Bank.

32  The current UBS rescue plan is injecting 6 billion Swiss Francs. On top of that, the Swiss Government set up a rescue fond for risky UBS assets worth 60 billion Swiss Francs.

33 The sequence of events do not match this hypotheses either. The first drafts of the Banking Act containing the article about banking secrecy date from 1932, Hitler only took power in early 1933.

34  This still holds true today. Banking secrecy has little to do with the financial crisis of 2008. Nevertheless, the fight against tax havens is presented as a “solution” against the financial crisis by certain political actors.

35  This explanation has been questioned by Vogler, arguing that such a deal amongst political parties would have led to discussion about article 47. According to Vogler, this explanation must be dismissed, since the parliament did not discuss article 47. (Vogler 2005)

36  Swiss Minister of Finance, Hans-Rudolf Merz, used to be a UBSbanker. Oddly enough, the former Swiss Minister of Finance Kaspar Villiger (1996–2003) is now the new CEO of UBS.

37  Interview with high-ranking former director from one of the two major Swiss banks.

38  As explained in detail in Vogler, 2005.

39  “Bürgerliche Parteien” is often translated as non-socialist parties. In the first half of the 20th century, it was certainly the liberal party that had the absolute majority in parliament. Since, it has always been a union of middle-right wing parties (Christian Democrats, Liberals and Swiss People’s Party) that were able to influence political decisions, even if some of those parties in certain questions teamed up with the socialists.

40  Throughout the Second World War, the Swiss franc was the only convertible currency besides the US dollar.

41  This concession came after a long campaign against Swiss Banks for their actions during the Second World War which resulted in compensation payments and a massive reputational loss.

42  The anti-money laundering regime is also mainly a US initiative. (See Levi and Reuter 2006)

43  This was a direct result of FATF recommendations that were issued after 9/11. See also: (2007). Weitergabe von Daten internationaler Finanztransaktionen durch SWIFT: Eine Beurteilung aus schweizerischer Perspektive. G. d. S. Nationalrates. Bern, Swiss Parliament.

44  (2005). FATF – Third mutual report on anti-money laundring and combating the financing of terrorism. FATF/OECD. Paris, FATF: 1–23. (see also Johnson 2008)

45  (2009). A Progress Report on the Jurisdictions surveyed by the OECD global forum in implementing the internationally agreed tax standard. Paris OECD.

46  Interview with the former state prosecutor responsible for tax evasion.

47  NZZ is the leading Swiss business newspaper with close ties to the financial actors. It is the only Swiss newspaper with truly international reach and enjoys a reputation for being an accurate high quality newspaper.

48  “da wieder Zeiten kommen können, in denen die seriöse und korrekte Geschäftsführung und Diskretionsbewahrung seitens der Schweizer Banken vermehrt geschätzt werden könnte.NZZ, Zürich, 18. März 1970

49  The only exception is the “Zinsbesteuerungsabkommen” with the European Union. This is the only case were banks were willing to make concessions in banking secrecy to enable the bilateral agreements between Switzerland and the European Union. Those agreements where crucial for the Swiss mechanical industry, which employs actually three times as many people as the banks but have much less political influence.

50 Bundi, A. (2009). Dem Finanzplatz treue ergeben. Tagesanzeiger. Zürich, TA Media.
See also: ti. (2006). Saft- und kraftlose Schweizer Finanzwelt in der Swift-Affäre. NZZ – Neue Zürcher Zeitung. Zürich, NZZ Verlag.See also: Rudolf (Strahm). “Die Bankenmacht im Schweizer Staat.” Das Magazin 2009(13): 12-17.

51  The public outrage over the bailout plan is so far limited to indignation at excessive salary of top banking managers.

52  Interview with high-ranking former director from one of the two major Swiss banks.

53 (2007). Weitergabe von Daten internationaler Finanztransaktionen durch SWIFT: Eine Beurteilung aus schweizerischer Perspektive. G. d. S. Nationalrates. Bern, Swiss Parliament.

54  Interview with high-ranking SWIFT official, summer 2008. (see also Schletti 2006)

55  Interview with high-ranking SWIFT official, summer 2008.

56  Swiss banks presented the “agreement on taxation of interest payments from foreign assets” to the Swiss people as the only way to preserve Swiss banking secrecy to guard the privacy of citizens (Referendum campaign on the Bilateral Treaties with the EU in 2005).

57 “Sapless and powerless Swiss banks in regards to the SWIFT Affair” (ti. 2006)

58  In German “Geschäftsprüfungskommission (GPK)” or “Commission des gestions d’affaires (CdG)” in French. More precisely, the GPK-N, the oversight body of the house of representatives (Nationalrat) investigated the SWIFT affair.

59 (2007). Weitergabe von Daten internationaler Finanztransaktionen durch SWIFT: Eine Beurteilung aus schweizerischer Perspektive. G. d. S. Nationalrates. Bern, Swiss Parliament.

60 (2006). Einsicht von US-Behörden in Daten des internationalen Zahlungsverkehr und Implikationen für die Schweiz. Bern, Schweizerischer Bundesrat.

61  Interview with high-ranking director of the Swiss National Bank, summer 2008.

62  “Zu diesem Schritt haben den Bundesrat u.a. rechtliche Gründe bewogen. See (2008). Swift, wirtschaftlicher Nachrichtendienst und Bankgeheimnis. Strafrechtliche Untersuchung? S. Parliament. Bern, Swiss Parliament.

63  The proceeding was criticized by Senator Dick Marty and Luc Recordon. See Ibid.

64  (2006). Access to SWIFT Transaction Data – Opinion of the Federal Data Protection and Information Commissioner. F. T. S. F. D. P. a. I. Comissioner. Bern, FDPIC The Swiss Federal Data Protection and Information Comissioner.

65 (2007). Weitergabe von Daten internationaler Finanztransaktionen durch SWIFT: Eine Beurteilung aus schweizerischer Perspektive. G. d. S. Nationalrates. Bern, Swiss Parliament.

66 “Dies zeigt aus Sicht der Kommission auf, wie beschränkt letztlich das schweizerische Bankgeheimnis ist.”

67  Interview with the responsible official for the SWIFT surveillance in the Office of the Federal Data Protection Commissioner, summer 2008.

68  For details on the EU-US accord see chapter 2.5

69  Swiss Interbank Clearing has recently been bought by SIX (Swiss Infrastructure and Exchange) and is now called Six Interbank Clearing. The payment system is nevertheless still called SIC.

70  All information on “remoteGATE” and SIC was retrieved from www.sic.ch (accessed August, 25th 2008)

71  Phone interview view the sales representative for “remoteGATE” at SIC. The sales representative revoked his consent to be cited by name after the publication of the author’s finding in a newspaper article. (Annex 2)

72  “Der Zahlungsverkehr über das Swiss Interbank Clearing (SIC) ist nicht tangiert. […] Der innerschweizerische Zahlungsverkehr in Schweizer Franken ist somit vom US-amerikanischen Programm nicht betroffen.(2006). Einsicht von US-Behörden in Daten des internationalen Zahlungsverkehr und Implikationen für die Schweiz. Bern, Schweizerischer Bundesrat.

73  Statement made by high-ranking SNB director in interview in summer 2009. The director revoked his consent to be cited by name after the publication of the author’s finding in a newspaper article. (Annex 2)

74  Information received from by the economic correspondent of the Tages-Anzeiger, May 2009.

75  Especially at the Swiss National Bank.

76  Statement made by high-ranking Swiss National Bank director in interview in summer 2009. The director revoked his consent to be cited by name after the publication of the author’s finding in a newspaper. (Annex 2)

77  Statement made in interview in summer 2009. The director revoked his consent to be cited by name after the publication of the author’s finding in a newspaper article. (Annex 2)

78  As the Private Banker Konrad Hummler called tax evading customers in an interview in 2008. (Richter 2008)

79  Interview with director of prominent Swiss Private Bank, summer 2008.

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