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I've heard about bank accounts in Zurich / Switzerland, but I don't fully understand the unique advantages of swiss bank accounts. What I do believe about these (but don't know for sure):

  • They accept money from anywhere without questions, including illegal/black money
  • They do not disclose how much a person owns to any authority
  • They are the only politically neutral country in the world, no allies, no enemies

Have I got anything wrong, or is there anything important that I've not understood yet about these?

What does this all amount to? What are their advantages in comparison to regular bank accounts?

Why would I want to store money in a swiss bank account?

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    Also, its a bit of a status symbol isn't it? : "hey look at me with my american express & swiss bank account" ;) – James Mar 8 '10 at 19:41
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    Yes..if you cannot afford a swiss watch, it is the next best thing :) – Victor123 May 3 '11 at 22:27
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A lot of Americans have used Swiss bank accounts to avoid paying taxes. However recently several large Swiss banks have started disclosing the details on some of their customers to the IRS. There isn't much security in Swiss banking at this point in time.

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    Living in Italy I will alwyas struggle to understand how an American could desire to avoid to pay taxes to US. You have a low taxation, and everything works: excellent justice/police and economic system, streets in very good condition. In Italy taxation reached 63%, basically each year you work until July to pay the greedy State and the next 5 months you earn what it remains to earn, and everything is crap: almost no justice, streets full of holes, pollution, corruption. Well I suppose everyone wants to avoid paying taxes maybe also people in Singapore try to avoid paying taxes, – Marco Demaio May 15 '12 at 21:42
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    @MarcoDemaio but in the US most people pay their taxes (we just try to reduce the amount) I was under the impression that Greece and Italy had strong cultures of most people not paying their taxes at all – sdrawkcabdear Sep 1 '16 at 23:56
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    I don't know what part of the US you live in, but 'excellent" is not what I would call our "justice" or police. I find the streets in Italy to be far superior to US roads. The US economy is stronger, but taxation (at least in California) would make an EU minister giddy. – rocketman Dec 22 '17 at 16:12
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This doesn't answer your question, but as an aside, it's important to understand that your second and third bullet points are completely incorrect; while it used to be true that Swiss bank accounts often came with "guarantees" of neutrality and privacy, in recent years even the Swiss banks have been caving to political pressure from many sides (especially US/Obama), with regards to the most extreme cases of criminals.

That is to say, if you're a terrorist or a child molester or in possession of Nazi warcrime assets, Swiss banks won't provide the protection you're interested in. You might say "But I'm not a terrorist or a pervert or profiteering of war crimes!" but if you're trying so hard to hide your personal assets, it's worth wondering how much longer until Swiss banks make further concessions to start providing information on PEOPLE_DOING_WHAT_YOU_ARE_DOING.

Not to discourage you, this is just food for thought. The "bulletproof" protection these accounts used to provide has been compromised. I work with online advertising companies, and a number of people I know in the industry get sued on a regular basis for copyright or trademark infringement or spamming; most of these people still trust Swiss bank accounts, because it's still the best protection available for their assets, and because Swiss banks haven't given up details on someone for spamming... yet.

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    You should turn them in to the FBI for big bucks! – Mark C Nov 24 '10 at 22:37
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    @MarkC Big bucks! No Whammies... – Michael Jan 8 '16 at 20:12
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For an American it's nearly impossible to open a Swiss bank account. Even as a Swiss person, you have to fill out a document, which asks you if you have a greencard or other relationships with the united states...

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Advantages

Here are some reasons why it is advantageous to hold a portion of your savings in other countries:

  • Banks in other jurisdictions may be safer than banks in your home country. For example, they may keep larger reserves, have more balanced loan portfolios, etc.
    • This will vary to an extent from bank to bank, of course, but some factors such as prevailing regulations or depositor insurance solvency may make banks in one country generally safer than in other countries.
  • Banks in other countries may offer better rates than in your home country.
    • This is especially important if banks in your home country offer interest rates below the rate of inflation (or in some cases, even negative interest rates!) for savings accounts.
  • Banks in other countries may offer better/more services than in your home country. For example, multi-currency accounts, being able to send wire transfers via online banking, etc.
  • It is more difficult for your home government to freeze/confiscate funds held in a foreign jurisdiction.
    • Depending on the prevalence of corruption / bureaucratic errors / civil asset forfeiture in your home country, this may be a worthwhile insurance policy even for law-abiding citizens.
  • The currency your foreign account is denominated in may appreciate relative to your home currency.
    • Note that some banks allow multi-currency accounts, so you may have the option to hold some of your money in a foreign country but still denominated in your home currency — giving you the benefits of geopolitical diversification without introducing FX risk.
  • Opening a local bank account and maintaining a certain balance will allow you to obtain legal residency in some countries, which may be useful/important to you, depending on your circumstances.
  • If you want to make investments (e.g., real estate, brokerage account, etc.) or create a business in a foreign country, it can be convenient to have a local bank account there that you can use to transfer funds in and out.

Disadvantages

However, it should be noted that there are some drawbacks to holding funds in foreign banks:

  • Depending on the country/bank (and in some cases, depending on the branch!), you may have to physically travel to the branch to open/service your account.
    • You must take extra care to ensure your contact information is always up-to-date, and in cases where online banking security settings require sending a code via SMS, make sure you don't lose that SIM card!
    • If you lose access to online banking, you may need to visit the branch in person in order to restore access. In rare cases (such as during the 2020 covid-19 crisis), international travel may be restricted or prohibited, which could result in you (temporarily) losing access to your funds.
  • Transferring funds between your domestic account and your offshore bank account is usually (but not always) more complicated/expensive than transferring funds between domestic accounts.
    • Be extra vigilant about the exchange rate that you are getting when converting one currency to another — it's virtually guaranteed that the bank doing the currency exchange has baked a fee into the exchange rate that they offer you.
    • Services such as Transferwise can help you to figure out whether you are getting a fair exchange rate from your bank, as well as potentially providing a more cost-effective way to transfer money between countries (as long as you are willing to trust the additional intermediary).
  • Your home government may require you to jump through extra hoops. For example, US citizens are required to file additional forms at tax time if they hold foreign bank accounts with a combined balance over a certain amount.
  • If you open an account in a country that doesn't speak your language, it may be really difficult to communicate with customer support to resolve any problems that may arise.
  • The currency that your foreign account is denominated in may depreciate relative to your home currency.
  • The funds in your foreign account may be protected from being frozen/confiscated by your home country's government... but that doesn't make them safe from the foreign country's government.

Tax Evasion and Money Laundering

OK, let's address elephant in the room now.

In general, simply transferring funds to a foreign jurisdiction will do nothing to help you evade taxes or hide evidence of a crime. Pretty much any method you can think of to transfer money is easily traceable, and any method that is difficult to trace is either illegal or heavily-regulated, with stiff penalties if you get caught.

There are a few jurisdictions that have very strict banking privacy laws (the Philippines, for example). If you can somehow get the money into a bank account in one of these countries, you might be OK... at least, until that country's government decides (or is pressured) to change its banking privacy laws.

But, what would you actually do with that money? Unless you want to go live in that country, you're going to have to transfer the funds out to spend them, and now you're right back on the radar — except now it's even worse, because the fact that the funds come from a suspicious jurisdiction will automatically cause your transfer to get flagged for investigation!

This is where money laundering comes into play. There are lots of ways to go about this (exceptionally illegal) activity, many of which do not involve banks at all (at least, not directly). How money laundering works is outside the scope of this question, but in case you are curious, here are a couple of articles about the "dark side" of finance:

In short, if you want to break the law, opening a foreign bank account isn't going to help much. In fact, the real crime is that offshore banking has such a criminal reputation in the first place!

Doing It Right

That said, it is possible to create legal distance between yourself and your money by using a corporate structure, and there are legitimate reasons why you might want to do this. Depending on which jurisdiction(s) you are a tax resident of, you can use this method to:

  • Protect your savings from frivolous litigation.
  • Legally reduce/defer your income taxes.
  • Take control of your tax-deferred retirement account.
  • And more.

Exactly how to do this is outside the scope of this question, but it's worth thinking about, especially if you have an interest in geopolitically diversifying your financial assets.

If you're interested in learning more, I came across a pretty comprehensive article about Offshore Basics that covers how and why to set up offshore legal structures.

(and yes, that makes now 4 links from the same site in one post! I promise it's just a coincidence; see disclaimer below)

Source

I am a US citizen with bank accounts in several countries (but not Switzerland; there are far better options out there right now).

Disclaimer

I have no affiliation with the website linked in this answer; while I was doing research for this answer, I found some really good supporting content, and it all just happened to be from the same source.

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The Main Benefits of Swiss Bank accounts

  1. Low level of financial risk and high levels of privacy they offer.

  2. The Swiss economy has not been involved in any conflicts and its one of the most stable economies in the world.

  3. It ensures the deposits to be safe from any financial crisis and conflict.

  4. Swiss law requires banks to have high capital requirements and strong depositor protection.

  5. Swiss law prevents the bank from disclosing any information regarding an account without the depositor's permission.

  6. Accounts held in Swiss Francs will earn a small amount of interest.

Hope this helps.

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