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Black money probe: India seeks details of secret accounts from Switzerland


Subhajit Sengupta,CNN-IBN
Jun 29, 2014 at 06:28pm IST

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New Delhi: As the Indian government expands its efforts to combat the menace of black money, it has made a fresh request to Switzerland seeking secret bank details and names of Indians who have unaccounted money in Swiss banks.

Earlier this week, the Switzerland said that it was readying a list of Indians suspected to have un-taxed money in Swiss banks, while Special Investigation Team constituted by Indian government promised action if any illegality is found.

The names of certain Indian individuals and entities came under the scanner of the Swiss authorities during an ongoing exercise to identify the real beneficiary owners of funds held in various banks operating in Switzerland. The list of such persons and entities is being shared with India, while further details would also be provided in due course and all necessary administrative assistance would be made available as well.

The Swiss government official refused to divulge the identity of the concerned entities as also the quantum of funds involved, citing the confidentiality clause of the information exchange framework between India and Switzerland.

He, however, said that they are suspected to have held un-taxed money in Swiss banks through structures like trusts, domiciliary companies and other legal entities based out of countries other than India.

The Indian link of these entities came to the fore after enquiries by the banks and regulatory authorities about the source of the funds and the beneficiary ownership of such accounts.

The development comes at a time when the official data published by Switzerland's central bank, SNB, has shown that Indian money in various Swiss banks rose by 43 per cent during 2013 to close to Rs 14,000 crore, while including the money held directly by Indian clients and those through fiduciaries or wealth managers.

A Swiss government official also said that Switzerland is looking forward to working with the new government in India and promised to extend all possible support to the SIT on black money.

Swiss government has been refusing to share details about the Indians named in this 'HSBC list', which was stolen by a bank employee and later found its way to tax authorities in various countries including India. Despite repeated requests from India, Switzerland has been saying that its local laws prohibit administrative assistance in matters where information has been sourced illegally, including through stolen lists.

The said 'HSBC list' allegedly contains names of Indians and other foreign nationals having ill-gotten wealth in Swiss unit of the global banking major. India is one of the 36 countries with which Switzerland has signed treaties to provide administrative assistance in tax matters in accordance with international standards.

In its latest annual report on 'international financial and tax matters 2014', the Switzerland's Federal Department of Finance has committed itself to compliance with international standards in the area of tax administrative assistance.

Switzerland's tax treaty with India provides for "exchange of information in tax matters to the widest possible extent without allowing the contracting states to engage in fishing expeditions or to request information that is unlikely to be relevant to the tax affairs of a given taxpayer".

The Swiss regulations also state that "the details to be supplied in the administrative assistance request are important procedural requirements to ensure that fishing expeditions do not occur, but they must not be interpreted in such a way that they frustrate effective exchange of information".

Swiss government has said that it would honour administrative assistance requests, if the requesting country identifies the taxpayer, "although this identification can ensue in a way other than by indicating the name and address".

The requesting country would also need to indicate the name and address of the alleged holder of the information, such as banks, if such information is known to it. In the case of missing data on the information holder, Switzerland will provide administrative assistance if "requests are in line with the principles of proportionality and practicability in accordance with internationally applicable standards".

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