European tax evaders might soon have to hide their cash in mattresses instead of secret Swiss bank accounts.
Switzerland has agreed to start sharing financial information with the European Union, making it much harder for Europeans to hide wealth from tax authorities.
The pact means European countries will in the future automatically receive the names, addresses, tax identification numbers and dates of birth of their residents with accounts in Swiss banks. The EU hailed the agreement as a major step in the fight against tax evasion.
Switzerland is a notorious magnet for offshore wealth.
The Alpine nation was long reluctant to change its banking privacy laws which make it possible for banks to refuse to hand over their customers' data to authorities. Some Swiss bank accounts don't even have names attached to them, using number identification instead.
But as the global pressure to tackle tax evasion mounted, Switzerland entered a number of bilateral agreements with countries like the U.K. and Australia, and is now negotiating one with the U.S.
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Global banking giant HSBC (HSBC) got in trouble last month after reports showed it helped its clients, including weapons dealers, tax evaders, tin-pot dictators and celebrities, conceal $100 billion in secret Swiss accounts.
According to data compiled by the consulting firm Deloitte, Swiss banks hold $2 trillion of foreigners' money, more than any other country.
The U.K. and U.S. were trailing closely behind Switzerland, with $1.7 trillion and $1.4 trillion held by their banks. But Deloitte said Asian countries such as Hong Kong and Singapore are quickly catching up and could soon overtake Switzerland as the offshore wealth capital.
The Swiss ministry of finance said the agreement is in the interests of Switzerland as a business location. But Deloitte's data show Switzerland has been losing some of the offshore wealth in the recent years. The data suggest clients withdrew around 7% of the deposits in the face of a coming crackdown on tax evasion.
