Among the revelations contained in the tax forms that Mitt Romney released Tuesday morning was evidence that the Republican candidate had stored money in Switzerland. According to one of the governor’s lawyers, the money in question was sitting in “a bank account. Nothing more, nothing less.” Can just anyone get a Swiss bank account?
No. Swiss banks have a history of dismissing applications originating in countries that have unusual tax regulations or a history of criminal economic activity. Such blacklists now tend to include the United States, on account of a federal law passed in 2010 called the Foreign Account Tax Compliance Act, which requires that Swiss banks submit sensitive information about their clients to the IRS, potentially violating Swiss privacy laws and imposing heavy costs of compliance. Those privacy laws are what make Swiss banks so attractive to foreign investors. (The country’s stable economy and low rate of inflation are also plusses.) Romney closed his bank account in Zurich in 2010, the same year that that law was passed, although the lawyer who pulled the plug claims he did so because the account “wasn’t serving any particular purpose.”
Today a few banks in Switzerland, such as Pictet in Geneva and Vontobel in Zurich, still accept American clients, provided those clients do business with a special SEC-registered subsidiary that caters to U.S. citizens living overseas. But these Americans must possess at least $1 million in investments before they can open an account—to ensure that they can afford the steep banking fees associated with carrying out the requirements of the Tax Compliance Act.
Even in the old days, an American citizen might have needed a special invitation or a referral from a current client before he or she could set up a private account at a Swiss bank, and the minimum initial deposit might have been in the hundreds of thousands of dollars. Matchmaking companies in Switzerland would help set up local accounts for international clients by making overtures to the private banks on their behalf. (This cost about one thousand dollars per application, but the “set-up fee” was refunded if the process didn’t go through.)
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Explainer thanks Catherine Hall and Patricia Schramm of the American Swiss Foundation.