We feel it makes good sense for any individual to hold a significant portion of their assets in Switzerland. This is also a good idea even if it is only for diversification purposes and the main bank relationship or wealth is still held elsewhere.
In a worst-case scenario, you want to have a share of your wealth in different jurisdictions. “Don’t keep all your eggs in one basket,” as they say. Here are some insights into the opening of a bank account in Switzerland.
Why you should consider opening a bank account in Switzerland?
According to a study by Boston Consulting Group, Switzerland has remained the largest offshore centre with 24% of the world’s share, followed by the U.K., Singapore, and Hong Kong. Switzerland has been able to defend its position amongst the world’s top financial hubs — holding twice the assets as Singapore — in spite of the need to adapt to a new environment in recent years following the erosion of the country’s bank secrecy law.
Banking in Switzerland has a very long tradition stretching back to medieval times. Because of this history, the country has a pool of highly knowledgeable and experienced international bankers. Professional advice and reliable, top-quality service are traditional strengths of Swiss banks and key factors — in addition to the country’s political and economic stability — for Switzerland’s success.
The Swiss financial centre contributes less than 10% to Switzerland’s GDP —less than in Luxembourg, Singapore, Hong Kong, and the United Kingdom — demonstrating that the country has a very competitive, innovative, and balanced economy overall. This also shows the resilience of its economy to past financial crises. Thanks to new provisions introduced after the last financial crisis, Switzerland is a country with one of the highest capital requirements in the world for global systemically important banks. Furthermore, clients are covered by a depositor protection plan for the first CHF 100,000 in the event of bankruptcy proceedings. The state guarantee of Switzerland which — together with a few other countries that belong to the world’s most stable nations —provides the highest possible protection according to Standard & Poor’s, Moody’s, and Fitch Ratings.
Who can open a bank account in Switzerland?
If you reside in Switzerland, there are almost no restrictions when it comes to client nationality. Furthermore, there is rarely a minimum amount for the initial deposit. Things get a bit trickier when this is not the case. If a minimum amount is required, banks will generally request roughly USD 500,000 for reputable clients from non-risk countries. This threshold has been lifted in the last few years as a result of the significant pressure on margins as well as increasing compliance costs. If you make use of a financial intermediary like IAP and we can assure the bank that we are familiar with the client’s country of origin and assure them of your wealth creation potential, the banks often are willing to lower this threshold.
People also often forget that banks are willing to provide marketable securities financing for your business or other investment opportunities, so you can take a loan against your investments held with a Swiss bank. As a result, keeping in mind the aforementioned threshold, the sum total of your bank relationship will be considered.
Most countries in Asia — except for Japan and Singapore — and Africa are internationally classified as medium or high risk. For these relationships, the Relationship Manager at the banks will be internally charged between USD 3,000 and USD 5,000. Therefore, less significant relationships with clients from these countries do not make financial sense for the bank and the threshold for onboarding such clients may be even higher. Thresholds and due diligence are also much higher for a politically exposed person (PEP) and bank account openings will not be possible for people from countries sanctioned by the U.S. such as Cuba, Iran, North Korea, Sudan, and Syria.
Which bank to choose?
There are, of course, many details that need to be considered when deciding which bank will meet your needs. Some banks will only offer savings or investment accounts and will not facilitate regular payments. Most banks are very similar in terms of pricing and services offered. However, there may be other important factors to consider such as the bank’s administration as well as its efficiency and effectiveness in dealing with simple transactions and, more importantly, during extreme urgency brought about by unforeseen events.
The soft factors will likely be more relevant for your bank relationship. In the last few years, banks have started to fulfil more stringent licensing requirements when providing cross-border financial services and regulators have asked them to streamline their market coverage. American clients in the U.S. will need to find one of the few SEC-registered investment advisers and a bank that will accept U.S. clients. Therefore, you almost need to know the strategies of the banks before looking at the pro and cons of each bank.
There are about 250 banks in Switzerland. The largest four banks in Switzerland are UBS, Credit Suisse, Pictet, and Julius Bär. There are about 24 cantonal banks which are government-owned commercial banks. These banks, however, mostly refrain from accepting international clients. We at IAP maintain trusted relationships with more than 20 banks in Switzerland and can assist you in choosing the right bank for you.
How to open a bank account in Switzerland?
The account opening process depends on the bank you choose. At some banks, accounts can be opened entirely online (from abroad) and clients are identified via video call. Some banks may allow you to complete the account opening process by mail in which case a photocopy of your official, government-issued passport would have to be certified by an approved institution. If you open a bank through a financial intermediary like IAP, we will be responsible for verifying your identity making sure that satisfactory due diligence is carried out.
The due diligence process has certainly become more rigorous over the last few years and Switzerland has, in fact, received good marks and achieved above-average results compared to other countries recognized by the Financial Action Task Force (FATF). During the verification process, we will ask for your personal details such as professional experience and education, ideally documented in a curriculum vitae (CV). Making sure that the assets have not been obtained through criminal activities, we may ask for documentation to verify the source of your funds as well as assets and income. For example, if you have sold property, we may request a copy of the sales contract. If you are the owner of a business, we may ask for the financial statements of your company. If you are employed, we may ask for a bank statement showing salary payments. Rest assured that any sensitive personal information is protected within the confines of international agreements.
We will require you to prove your identity with an official document such as a passport. According to the agreement in the Swiss banks’ code of conduct with regard to the exercise of due diligence (CDB 16), if you do not meet with anyone at the bank in person, the residential address you provide only needs to be verified by sending mail to that address. Since Switzerland has agreed to share information regarding bank and safekeeping accounts and report to the domestic tax authorities of the following partner states, we may ask for proof of your residence status or proof of your address through a visa, residence or work permits, or a recent utility bills, signed copy of your lease, or official correspondence. In this regard, we will also require a tax residency self-certification form that covers the Common Reporting Standard as well as FATCA (Foreign Account Tax Compliance Act).
Last but not least, if there is any doubt that the contracting partner is not the beneficial owner, we may require a written statement known as Form A that discloses the identity of the owner.
We open new bank accounts in the worlds’ major offshore financial centres such as London, Singapore, and Hong Kong, or tax havens such as Mauritius and Malta almost every other week and we believe that Switzerland is by no means more complicated. The time required to open a bank account varies from case to case and can take anywhere from a few days to three months.
How much does it cost to have a bank account in Switzerland?
While it is true that offshore accounts tend to be more expensive than onshore accounts, charges for bank accounts are not necessarily much higher in Switzerland than elsewhere. This, despite the fact that Switzerland has one of the highest overall price levels mostly due to a strong Swiss franc. In the new world of tax transparency and as new FinTech disruptors take a place in the areas of payment, FX, trading and robo-advice capabilities, Switzerland has to offer competitive prices in order to retain clientele.
Clients with large accounts generally receive very attractive rates and concierge-like service. They must accept the trade-off between cheaper and more customized or robust platforms that provide better protection, execution, or services. Switzerland has been praised as top of the class in the World Economic Forum (WEF)’s Global Competitiveness Index — for the ninth year in a row — narrowly ahead of the United States and Singapore. The competitive stance of Swiss financial institutions is also evidenced in a recent analysis done by ForexBrokers.com which have compared the largest U.S. electronic brokerage firm with Switzerland’s leading online bank for trading FX. The fact that cheaper is, however, not always better was experienced in the first hours after the Brexit decision in 2016, when trading at Switzerland’s leading online bank was not possible during the first trading hours while other, longer established Swiss banks did not face any issues.
We certainly can help you find a suitable bank for your needs and facilitate with the opening of an account. We have established close ties with many banks in Switzerland and beyond. Feel free to call us or send us an email.