Numbered bank account
Numbered bank accounts are bank accounts where the identity of the holder is replaced with a multi-digit number known only to the client and select private bankers. Although these accounts do add another layer of banking secrecy, they are not completely anonymous as the the name of the client is still recorded by the bank and subject to limited, warranted disclosure.
During the 1910s, bankers from Switzerland created numbered bank accounts to add a layer of anonymity for European clients seeking to avoid paying World War I taxes.[1] With the passage of the Swiss Banking Law of 1932, the practice proliferated across the banking industry in Switzerland.[2] Some banks replace the number with a code name such as "Mister X" or "Madam Z" that identifies the client, alternatively.[3] However, to open this type of account in Switzerland, clients must pass a multi-stage clearance procedure and prove to the bank the lawful organs of their assets.[4] Banking institutions that have adopted this practice in Europe, Asia, and the Americas also require clients to undergo stringent vetting and provide the identity of the beneficial owner.[4] The usage of fake names to open these accounts is prohibited in Switzerland, the European Union, the United States, and other off-shore financial centers.[4]
Many sovereign state governments have outlawed the usage of these accounts as they commonly associated with a desire by the account holder to either minimize governmental scrutiny and taxation.[4] Most regulations governing the usage of numbered bank accounts require that the holder signs a document and undergoes a background check that confirms who they are and a connection to the account.[5] Despite the regulations, numbered bank accounts by their very nature are more private than normal bank accounts. In Switzerland, for example, bankers are outlawed from disclosing whether or not an account is numbered to any governmental agency unless proof of deliberate fraud is established, not merely the non-reporting of assets in order to avoid taxation.[2]
International regulation
In order to restrict the use of numbered accounts for money laundering and financial fraud, the Council of Europe mandated in 1980 that numbered bank accounts be subject to international and domestic regulations pertaining to the verification of the identities of account holders and their activities.[6][7] Under these regulations, banks which operate numbered accounts may be required by a court order to reveal the owner's name and financial details, and the identity of the holder or beneficial owner must be examined for obvious fraudulent intentions at the start of the banking relationship.[8][9] Since July 1, 2005, Switzerland has also charged a withholding tax on all interest earned in the personal Swiss accounts of European Union residents, a measure designed to satisfy E.U. tax requirements while still preserving account holder anonymity.[8]
References
- ^ Schütz, Dirk (2000). The Fall of UBS: The Forces that Brought Down Switzerland's Biggest Bank. Pyramid Media Group. ISBN 9780944188200.
- ^ a b "Swiss-Privacy.com | Numbered bank account". www.swiss-privacy.com. Retrieved May 18, 2018.
{{cite web}}: Cite has empty unknown parameter:|dead-url=(help) - ^ "Numbered Bank Accounts - Series 10 | Investopedia". Investopedia. November 12, 2014. Retrieved May 18, 2018.
A broker dealer, at the request of the customer, may open an account that is simply identified by a number or a symbol, as long as there is a statement signed by the customer attesting to the ownership of the account.
- ^ a b c d Koba, Mark (August 20, 2008). "How To Open A Swiss Bank Account". CNBC. Retrieved May 12, 2018.
- ^ "Offshore Manual: Swiss Numbered Bank Account". www.offshore-manual.com. Retrieved May 18, 2018.
{{cite web}}: Cite has empty unknown parameter:|dead-url=(help) - ^ Switzerland: Bundesgesetz zur Bekämpfung der Geldwäscherei im Finanzsektor (Geldwäschereigesetz, GwG) (Money Laundering Act)
- ^ Austria: Bundesgesetz über das Bankwesen (Bankwesengesetz –BWG) § 40ff[permanent dead link] (Federal Law on Banking)
- ^ a b Switzerland: Agreement on the Swiss banks' code of conduct with regard to the exercise of due diligence (CDB 03)
- ^ Austria: FMA, Austrian Financial Market Authority – Circular on Identification and Verification of Identity