Monday, June 19, 2017

Free Study Materials - India gets Direct Access to Swiss Accounts

Free UPSC GS3 Economy Study Materials 

Swiss Accounts - Direct Access

Swiss Accounts - Direct Access


What has Switzerland Ratified?

  • Switzerland on 16/06/2017 ratified automatic exchange of financial account information (AEOI) with India and 40 other jurisdictions to facilitate immediate sharing of details about suspected black money, even as it sought strict adherence to confidentiality and data security.
  • Adopting the dispatch on introduction of the AEOI, a global convention for automatic information exchange on tax matters, the Swiss Federal Council said the implementation is planned for 2018 and the first set of data should be exchanged in 2019.
  • The council, which is the top governing body of the European nation, will soon notify the Indian government about the exact date from which the automatic exchange would begin.
  • As per the draft notification approved by the council in its meeting on 16/06/2017 Friday, the decision is not subject to any referendum — which means there should be no further procedural delay in its implementation.
  • The council said the proposal to introduce AEOI with India and others “met with widespread approval from the interested parties who voiced their opinions in the consultations“.
  • “In concrete terms, the AEOI will be activated with each individual state or territory by means of a specific federal decree within the framework of this dispatch,” it added.
  • The exchange of information itself will be carried out based on the Multilateral Competent Authority Agreement (MCAA) on the Automatic Exchange of Financial Account Information, which in turn is based on the international standard for the exchange of information developed by the Organisation for Economic Co-operation and Development (OECD).
  • The council said it will prepare a situation report before the first exchange of data, which is planned for autumn 2019.

Why is Switzerland Forced to Share Information?

  • For decades, Switzerland was the place where money went to hide. Cash sent to its mountain sanctuaries was protected by some of the strictest secrecy laws in the world.
  • But the euro crisis of 2011 saw Switzerland's strict banking secrecy come under assault from countries such as Germany and Britain as never before.
  • The council that serves as Switzerland's executive branch had to start looking into steps toward banking transparency after having been threatened with painful isolation if it did not agree to reforms. 
  • There have also been continuous global efforts to crackdown on illicit fund flows in the system and do away with banking secrecy practices.

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