Secrecy in the Swiss banking system is enshrined in law, both civil and criminal, and has been protecting the accounts of the wealthy for over 300 years.

Initailly bankers to the Kings of France, the Swiss reputation for service and descretion has grown to legendary proportions and it is estimated that one third of the worlds private fortunes are based in Swiss banks.

The admiration for the Swiss banking system has been tainted by the accusations of hiding laundered money and of aiding tax evasion. Ever the cautious, the Swiss authorities  mulled over this siuation for many years and created regulation and systems that allow freedom for bankers to do business, protection for account holders and disincentives for the criminally minded. This flexible and affective approach to regulation is seen to be more affective than the draconian systems in the UK or US, for example.

Atop of the pile of regulators is the Swiss Banking Federation who regulate and monitor Swiss Banks and Securities Dealers. There are several regulatory organisations overseeing Asset Managers who have to join one of the organisations to practice. These regulatory organisations combined with Swiss criminal and civil law would impose harsh penalties to asset managers, banks or securities dealers who decided to aid any criminals in laundering their funds. The affect has been that Swiss financial professional will politely decline any business that looks like trouble.

However, for those who are seeking a home for legal funds away from the prying eye of tax authorities the banking secrecy remains in place. A banker who reveals information, even that an individual has an account, will suffer severe penalties which could included custodial sentences. These penalties can be imposed, uniqely in Switzerland, without the client even complaining.

The Swiss Federal Act on Banks and Savings Banks was enacted in 1934 in the wake of the rise of Nazi Germany. Its Article 47 is directed primarily against espionage in banking. Nazi agents began bribing bank employees to crack the secrecy of accounts. Once a depositor was known, the agents demanded his assets under threat of reprisals against relatives living in Germany. In those circumstances, to many, the existence of a secret secured bank account made a lot of difference.

Article 47 reads thus: "1. Whoever wilfully divulges a secret which has been entrusted to him in his capacity as a representative, officer, employee, authorised agent, liquidator or commissioner of a bank, as an observer of the banking commission, as an officer or employee of a recognised chartered accountant, or which secret he learned about in such capacity and whoever incites to such divulging of professional secrecy, shall be punished with imprisonment of up to six months or with a fine of up to 50,000 Swiss francs.

2. If the offender has acted negligently, the punishment shall be a fine of up to 30,000 Swiss francs.

3. Breach of professional secrecy remains punishable even after dissolution of the official or private mandate or work contract.

Basically, don't ask a Swiss banker about his clients...

Swiss banks will divulge information on an account if it is a criminal investigation for drug money, proceeds of other crimes and money laundering, of course. The system will allow enquiries concerning divorce, tax evasion, bankruptcy etc but these will need to be heard by a Swiss Judge (who are the only ones who can lift the secrecy laws) and the judiciary are extremly unlikley to lift the secrecy laws for anything other than crime.