Black money: Swiss goverment says cooperating intensely with India

Under pressure to act on black money front, Switzerland has said it is intensely pursuing cooperation with India, even as the bilateral ties remain "tense" over its refusal to share bank account details on the basis of stolen data.

Despite a difficult environment and differences over sharing of information, the "door for dialogue nevertheless remains open" with India, the Swiss government said.

Reflecting the high priority accorded to India, Switzerland in its latest annual report on 'international financial and tax matters' has also described the country as one of the four "important partners" with whom it intensely pursued cooperation in tax matters during 2014.

The other nations mentioned alongside India on this issue are France, Italy and the US.

Switzerland, long known as a place with unbreakable banking secrecy, has come under intense global pressure, including from India, amid worldwide efforts to crack down on illicit fund flows.

Armed with information received about its citizens holding secret accounts in Swiss banks, India has been seeking details from Switzerland, but most of these requests were being stonewalled by the European nation on the ground of those being based on stolen data.

Consequently, India has now changed its strategy and has decided to seek details on the basis of independent evidence collected by it on suspected cases of black money stashed in Swiss banks. Switzerland has now agreed to share details if India is able to provide independent evidence.

Last month, Finance Minister Arun Jaitley met his Swiss counterpart Eveline Widmer-Schlumpf and discussed the issue on the sidelines of the World Economic Forum (WEF) Annual Meeting in Davos.

Referring to India in detail in its 'Report on international financial and tax matters 2015', Switzerland said that India has stepped up its fight against black money.

"India's finance minister, Arun Jaitley, took up office on May 26, 2014. He has joined the government at a time when India is stepping up its fight against tax evasion and fraud, with the creation of a Special Investigation Team (SIT) entrusted with shedding light on the assets held abroad by Indian residents.

"Relations with Switzerland remain tense due to the refusal to exchange information when a request is based on data obtained illegally.

"Despite the difficult environment, the door for dialogue nevertheless remains open. A meeting was thus held in Bern on October 15, 2014 on Switzerland's initiative. The meeting took place in a positive atmosphere and ended with a joint statement identifying the basis for solutions concerning the bilateral issues under discussion," it added.

In the preface to the Swiss government report, Swiss

Finance Minister Eveline Widmer-Schlumpf said she wants Switzerland to be a stable, competitive and internationally accepted financial centre and business location.

Acknowledging that this cannot happen "without painful adjustments", she said the country is committed to international standards.

"What is required, therefore, is adequate financial regulation for increased stability and greater consumer and investor protection as well as adjustments to the taxation of companies and, with regard to the transparency of bank client data, consistent rules to combat financial crime.

"We are actively committed to international standards that should apply for all countries. And we implement these standards in an effort to contribute to financial stability and morally sound global financial markets," she noted.

Switzerland has earlier informed India that the information based on stolen data would not be shared with another country, but such requests can be looked into in case of independent evidence on the same being made available.

After meeting his Swiss counterpart last month, Jaitley had said that India has gathered independent evidence about its citizens having unaccounted money in Swiss banks and Switzerland has offered full co-operation in sharing of information in this regard.

In October last year, both countries had reached an understanding with regard to co-operation on tax matters. In continuation with that agreement, Jaitley last month had a detailed meeting with the Swiss delegation in Davos as to what could be the parameters of that independent evidence.

"... Our tax officials are working round the clock. They are trying to finish all the assessments and they are trying to collect evidence. Several people in that list have already admitted to the fact that they had accounts.

"Now we do have independent evidence and material available. So, now we have to come back to Switzerland with that material on the basis of which we can get (the information)," the Finance Minister had said.

According to findings of the Supreme Court-constituted SIT on black money, at least 339 Indians have been found to have stashed Rs 4,479 crore in Swiss banks.

After probing into a list of 628 Indians, who figured on a list of account holders in HSBC's Geneva branch that India got from the French government, the SIT has said that prosecution has begun against 79 entities.

Out of these, no balance has been found in case of 289 accounts, according to a report of the SIT submitted to the court, portions of which were released by government today. 

Out of the 628 persons, 201 were either non-residents or non-traceable, leaving 427 persons for further action. While the total amount involved in these cases is about Rs 4,479 crore, the Income Tax Department has finalised assessment for 79 entities involving 339 cases.

The issue of black money has been a major political issue in India, including in the last Lok Sabha polls last year.

Incidentally, Switzerland in December last year indicted Herve Falciani, a former HSBC employee, who had leaked information related to thousands of bank account holders at its Geneva branch. He was charged by the Swiss authorities for 'industrial espionage, breach of trade and banking secrecy'.