Against black money: Swiss account details of Indian residents revealed

India has received the first tranche of details about financial accounts of its residents in Swiss banks under a new automatic exchange of information framework between the two countries, marking a significant milestone in the fight against black money suspected to be stashed abroad.

India figures among 75 countries with which Switzerland's Federal Tax Administration (FTA) has exchanged information on financial accounts within the framework of global standards on Automatic Exchange of Information (AEOI), an FTA spokesperson told PTI.

This is the first time that India has received details from Switzerland under the AEOI framework, which provides for exchange of information on financial accounts that currently active as well as those accounts that were closed during 2018.

The next exchange would take place in September 2020, the spokesperson added.

However, the exchange is governed by strict confidentiality clauses and the FTA officials refused to disclose specific details on the number of accounts or about the quantum of financial assets associated with the accounts of Indian clients of Swiss banks.

Overall, the FTA has sent information on around 3.1 million financial accounts to the partner states and received information on around 2.4 million from them.

The exchanged information includes identification, account and financial information. These include name, address, state of residence and tax identification number, as well as information concerning the financial institution, account balance and capital income.

Separately, the Switzerland government said in a statement the number of countries with which the AEOI (Automatic Exchange of Information) took place has risen to 75 this year, out of which it was reciprocal with 63 countries.

In the case of 12 countries, Switzerland received information but did not provide any, either because those countries do not yet meet the international requirements on confidentiality and data security (Belize, Bulgaria, Costa Rica, Curaçao, Montserrat, Romania, Saint Vincent and the Grenadines, Cyprus) or because they chose not to receive data (Bermuda, British Virgin Islands, Cayman Islands, Turks and Caicos Islands).

The data was collected by the FTA from around 7,500 institutions including banks, trusts and insurers.

"The largest exchange was with Germany (in both directions), as was the case in the previous year. The FTA cannot provide any information on the amount of financial assets," the statement added.

Asked about specific details relating to India, the FTA spokesperson said, "The communication of statistical data is subject to the confidentiality clauses as well."

To another query on the next exchange of information with India, the spokesperson said, "According to the international agreement in place, the exchanges have to take place within nine months after the end of the respective calendar year. This means the exchange takes place in September, except for corrections."

The Swiss government said Switzerland has committed itself to adopting the global standard for the international automatic exchange of information in tax matters.

The legal basis for the implementation of the AEOI in Switzerland first came into force on January 1, 2017.

"The exchanged information allows the cantonal tax authorities to verify whether taxpayers have correctly declared their financial accounts abroad in their tax returns," the FTA said.

It said the exchange will take place with around 90 countries next year.

The OECD Global Forum reviews the AEOI implementation.

According to experts, the data received by India can be quite useful for establishing a strong prosecution case against those who had any unaccounted wealth, as it provides entire details of deposits and transfers as well as of all earnings, including through investments in securities and other assets.

On condition of anonymity, several officials said that the details relate mostly to businessmen, including non-resident Indians now settled in several South-East Asian countries as well as in the US, the UK and even some African and South American countries.

Besides, there are at least 100 cases of older accounts held by Indians, which might have been closed before 2018, for which Switzerland is in the process of sharing details with India under an earlier framework of mutual administrative assistance as Indian authorities had provided prima facie evidence of tax-related wrongdoings by those account holders.

These relate to people engaged in businesses like auto components, chemicals, textiles, real estate, diamond and jewellery and steel products.

A Swiss delegation was in India in August before the first set of details could get shared under the new automatic information exchange, while the two sides also discussed possible steps to expedite execution of tax information sharing requests made by India in specific cases.

It is feared that many Indians might have closed their accounts after a global crackdown on black money led to Switzerland buckling under pressure to open its banking sector for scrutiny to clear the long-held perception of Swiss banks being safe haven for undisclosed funds.

However, the AEOI only relates to accounts that are officially in the name of Indian residents and they might include those used for business and other genuine purposes.

Switzerland agreed to AEOI with India after months-long process, including review of the necessary legal framework in India on data protection and confidentiality