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The news that Bangladesh-linked money in Swiss banks increased by around 23 per cent last year has drawn attention of various quarters in the country. The significant rise in deposits has triggered widespread discussions, because of the fact that the notable increase did happen during a year when the country witnessed a mass uprising and the ouster of autocratic Prime Minister Sheikh Hasina. Many argued that the rise in deposit recorded since beneficiaries of the ousted regime transferred their ill-gotten financial assets and parked them in the safe vaults of the Alpine banks.
The data, released by the Swiss National Bank (SNB) on June 19, showed that Bangladesh-linked funds in the banks in Switzerland stood at CHF (Swiss Franc) 598 million in 2024, equivalent to Tk. 89.12 billion at the current market price. The amounts were CHF 58.38 million (approximately Tk 8.69 billion) in 2022 and CHF 26.38 million (approximately Tk 3.93 billion) in 2023. Bangladeshi money in the Swiss banks reached its peak in 2021 when the amount was CHF 871.76 million.
It is worth noting that Bangladeshi money in Swiss banks refers to deposits linked to Bangladesh in various ways. Besides Bangladeshi institutions and citizens, money deposited by firms and individuals with links to Bangladesh is also included. Several Bangladeshi nationals working in Switzerland and other European countries have their money in these banks. Bangladesh-based business houses also have accounts there. Moreover, there should be no reason to claim that all money deposited in Swiss banks are dirty or illegal money.
The popular perception is that people across the world keep their illicit income in Swiss banks, where the secrecy of depositors is highly protected. This perception is not baseless. The nature of secrecy makes Switzerland one of the leading tax havens, where individuals' or businesses' income or wealth is taxed at very low rates, if at all. As the beneficiaries of tax havens typically don't reside or operate in these countries or jurisdictions, tax havens also provide secrecy to conceal non-residents' incoming wealth from other governments. Therefore, tax havens offer lower tax rates, along with a legal system that ensures confidentiality for non-residents. That's why tax havens are termed as offshore jurisdictions or secret jurisdictions.
However, the significant surge in Bangladeshi money in Swiss banks over the past year is a cause for concern. It's not improbable that those who illegally transferred money from Bangladesh to various destinations in recent years have once again moved their funds to Swiss banks for better protection of their ill-gotten financial assets. The fall of the Hasina regime and the subsequent efforts of the Yunus-led interim government to identify and recover illegally flown money may have alerted those who have stashed their black money in different tax havens. There are indications that over the years, some prominent businessmen, along with several politicians and bureaucrats, have stashed their black money in Singapore, the United Arab Emirates (UAE), Canada, Hong Kong, the United Kingdom (UK), and the United States (US). Some of them may now be switching to Swiss banks, as Bangladesh lacks an agreement with Switzerland on the exchange of information on financial accounts.
Due to pressure from various countries, primarily the United States (US), the Swiss government has begun to relax the rules of bank secrecy. By joining the OECD accord on the exchange of banking information in 2014, the country opened the window to share information of the non-resident account holders in Swiss banks with the respective countries. In 2017, legislation was passed there allowing the Swiss government to share data with other countries under the Automatic Exchange of Information (AEOI). It has been on the rise. So far, more than 100 countries have AEOI agreement with
Switzerland. Switzerland implements the AEOI in accordance with the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information (MCAA). Within the European Union (EU), the AEOI has been implemented based on a bilateral international treaty. India and Pakistan are the two countries in South Asia that have an AEOI agreement with Switzerland.
Under the AEOI system, banks in Switzerland disclose financial account data to the Swiss authorities. The Swiss authorities then automatically forward the data to the authorities in India or Pakistan, enabling them to examine the foreign financial account data. The primary purpose of the AEOI is to determine the extent to which taxpayers in a country hold bank accounts in Switzerland or any other country and whether they have transferred funds in a manner that avoids or evades taxes. The Swiss authorities, however, are committed to ensuring that information shared with a country does not breach international data protection requirements. Data sharing and receiving countries must adhere to the confidentiality clause of the AEOI. India has received a series of data about the Indian nationals and entities who have stashed money in Swiss banks after signing a bilateral agreement with Switzerland regarding AEOI in 2017.
During the Hasina regime, discussions arose about recovering Bangladeshi funds from Switzerland. The autocratic government, however, did not take any effective measures to sign a bilateral agreement with the Alpine nation. In other words, the ousted regime kept the window open for illicit financial flows from the country. At that time, the central bank prepared an analytical note on Bangladesh-linked Swiss money, which claimed that both the assets and liabilities in the Swiss banks were generated mainly due to foreign trade transactions. This situation underscores the urgent need for bilateral agreements to prevent such financial flows in the future.
There is, however, another source to know the amount of Bangladesh-linked money in the Swiss banks. Locational Banking Statistics (LBS), prepared and released by the Bank for International Settlements (BIS) quarterly, also provides some information. LBS data showed that money deposited by Bangladeshis (non-bank or individual) in Swiss banks declined in the last two years. The amount was $100 million in 2022, which decreased to $63 million by the end of 2023 and further declined to $43 million in 2024. The table also showed that (table-1) individual deposits in Swiss banks are much lower as per SNB statistics than shown in BIS locational banking statistics. The Bangladesh Bank may investigate the matter further and provide a comprehensive explanation on the issue.