Swiss Banks: Deposits by BD nationals drop

Just one year after a rise, Bangladeshi nationals' deposits in Swiss banks dropped 2.26 percent year-on-year in 2019 to 603 million Swiss francs or Tk 5,427 crore.

The Swiss National Bank (SNB) came up with the data in its annual report titled "Banks in Switzerland 2019".

The amount was Tk 5,553 crore in 2018 and Tk 4,329 crore in 2017, according to the report. The SNB report, however, does not shed light on the alleged black money held by Bangladeshis.

Experts say tighter application of Anti-Money Laundering or Combating the Financing of Terrorism (AML/CFT) regulations on banking transactions worldwide and various investment incentives offered by different countries is the reason behind the fall of the deposits.

They, however, said the rate of drop is very insignificant and the volume of deposits is still a matter of concern.

Over the last several decades, Switzerland has provided wealthy families around the globe with a convenient and safe place to stash their money. The country's political neutrality, stability and tradition of bank secrecy have kept the fortunes beyond the reach of national governments and even the most determined tax collectors.

But Swiss banks have come under global pressure in recent times, as a number of countries are stepping up crackdowns on black money. A Europe-led clampdown has also been launched on tax evasion and corruption.

Zahid Hussain, former lead economist of the World Bank's Dhaka office, said the deposits from Bangladeshi companies in 2019 are slightly lower than in 2018, and this does not necessarily mean capital flight has declined.

He said Swiss banks as safe havens have lost their glamour with tighter application of AML/CFT regulations on banking transactions worldwide.

"As a result, capital flight seems to have changed both its form and destination, taking advantage of various investment incentives offered by countries such as Australia, Canada, US, Malaysia and so on. Our own policies to control capital flight have failed to produce visible results," he told The Daily Star yesterday. 

Whenever such reports are published, Bangladesh Bank officials say Bangladeshi nationals' deposits in Swiss banks don't mean the money was sent there only from here or was illegally earned or laundered.

Bangladeshis living abroad also keep their money in Swiss banks, they say. Bangladeshi businesspeople, who make transactions with firms or individuals in European countries for business purposes, may have also kept money in Swiss banks, they argue.

Zahid Hussain, however, said the black money whitening facility offered in every budget, effectively for indefinite period, has served as a free insurance policy for black money holders.

"They always have the option of whitening their black money when faced with the risk of getting caught. As a result, they are able to take the money out of the country when it is most convenient," he added.

"The FY21 budget has made the black money whitening facility more generous. At the same time, a 50 percent penalty has been announced on trade over or under invoicing without any clarity on how these will be assessed. Such mixed messages do no good in changing the status quo."

Dr Iftekharuzzaman, executive director of Transparency International Bangladesh, said although the latest figures are slightly less than that for the previously disclosed data, they show a persistence of the ominous trend of capital flight from the country through illicit financial transfers.

"It comes against the backdrop of the proposed budget for FY 20-21 that practically gives legitimacy to money laundering, totally disregarding specific provisions of the relevant national and international laws, which is unprecedented. It is extremely disconcerting in a country that is badly starved of capital and revenue," he told this newspaper yesterday.

The Swiss data reiterate the importance of refraining from such blanket budgetary impunity to illicit transfer. They in fact call for serious and effective efforts by the relevant agencies of the government to bring back stolen assets and bring to justice those who are involved in such national and international crime, he said.

"This is quite possible through international cooperation including mutual legal assistance under the UN Convention against Corruption if there is the political will to take the necessary actions without fear or favour even though many of those involved may be amongst high and mighty," he said.