Indian Money at Swiss Banks

Presentation giving an insight into why Swiss Banks are preferred by Indians providing a background to the rules and laws pertaining to the same.

1. Group 9, Division AGroup 9, Division A
Taru BakshiTaru Bakshi
Sahibjot KaurSahibjot Kaur
Tanmay MukherjeeTanmay Mukherjee
Swatantra SaurabhSwatantra Saurabh
V Rameshwar RaoV Rameshwar Rao
Sikha SonthaliaSikha Sonthalia
Sanjukta Das Sanjukta Das

2. Switzerland is not a member of the NATO, nor a member of the European
Union. The rights of the individual Swiss citizens are protected by three
political safeguard
1.A Weak Chief Executive
2.The Referendum
3.The Initiative
Swiss BanksSwiss Banks
Two largest banks of Switzerland are Union Bank of Switzerland and
Credit Suisse Group which together account for over 50 percent of the
balance sheet total of all banks in Switzerland.
Raiffeisen Group
Regional and local
Cantonal

3. •Code of secrecy is over 300 years old
•The first Swiss banking clients were the kings of France
•The Great Council of Geneva, in 1713, established
regulations
•Bank secrecy was regulated only by civil law at that time.
• Divulging Client Information become Criminal Offence
Two Main Reasons:
•Nazi Spies
•French Scandal with Basler Handelsbank
HistoryHistory

4. After World War IIAfter World War II
•Jews Dormant Money
•In 1984, the people of Switzerland once again voted in favor of
maintaining bank secrecy by a whopping 73 percent.
•Anti money laundering laws have been incorporated into the Swiss
Criminal Code in 1990`s
Money in Swiss BanksMoney in Swiss Banks
Country Amount
India $1891 billion
Russia $610 billion
China $213 billion
UK $210 billion
Ukraine $140 billion

5. Why Swiss banks areWhy Swiss banks are
counted as safest banks counted as safest banks
in the world ?in the world ?
1. Switzerland has had an extremely stable economy and
infrastructure for many years.
2. Swiss bankers are also highly trained in investing and
know how to grow your money.
3. Swiss franc is considered one of the world's premier
currencies with virtually zero inflation and has been
historically backed by at least 40 percent gold reserves.
4. Swiss banks are also known to have very sophisticated
investment services and Internet banking.

6. 5. Swiss law forbids bankers to disclose the existence
of your account without your consent
6. In Switzerland, if a banker divulges information about
a bank account without permission, immediate
prosecution is begun by the Swiss public attorney
7. Bankers face up to six months in prison and a fine of
up to 50,000 Swiss francs

7. Swiss Bank AccountsSwiss Bank Accounts
and the Lawsand the Laws
•Article 47 of the Federal Law ,1934
In following cases there is a duty for bankers to provide
information regarding bank account.
•Civil proceedings (such as inheritance or divorce)
•Debt recovery and bankruptcies
•Criminal proceedings (money laundering, association with a
criminal organization, theft, tax fraud, blackmail, etc.)
•International mutual legal assistance proceedings

8. The Swiss Federal Banking Commission (SFBC) may
communicate information only to the supervisory authorities in
foreign countries subject to three statutory conditions:
1.The information given can't be used for anything other than
the direct supervision of the banks and can't be passed on to
tax authorities.
2.The requesting foreign authority must itself be bound by
official or professional confidentiality and be the intended
recipient of the information.
3.The requesting authority may not give information to other
authorities or to other public supervisory bodies without the
prior agreement of the SFBC

9. Why world investsWhy world invests
in SWISS BANKS?in SWISS BANKS?
Swiss bank accounts are used by :-
• Corrupt Government officials
• Millionaires
•Criminals to hide ill-gotten wealth
• Middle class people
• People staying in countries with unstable
government

10. In India, Black money refers to funds earned on the 
black market, on which income and other taxes has not
been paid. The total amount of black money deposited
in foreign banks by Indians is unknown. Some reports
claim a total exceeding US$1.4 trillion are stashed in
Switzerland. Other reports, including those reported by
Swiss Bankers Association and the Government of
Switzerland, claim that these reports are false and
fabricated, and the total amount held in all Swiss banks
by citizens of India is about US$2 billion.
What is Black Money?What is Black Money?

11. •In 2011, the Indian government received the names of 782 Indians who had
accounts with HSBC.

•According to White Paper on Black Money in India report, published in May
2012, Swiss National Bank estimates that the total amount of deposits in all
Swiss banks, at the end of 2010, by citizens of India were CHF 1.95 billion
(INR 9,295 crore, US$ 2.1 billion).
•In May 2012 that the deposits of Indians in Swiss banks constitute only 0.13
per cent of the total bank deposits of citizens of all countries. Further, the share
of Indians in the total bank deposits of citizens of all countries in Swiss banks
has reduced from 0.29 per cent in 2006 to 0.13 per cent in 2010.
•The Ministry of Finance through the 
Investigation Division of the Central Board of Direct Taxes released a White
Paper on Black Money giving the Income Tax Department increased powers.
Black Money in IndiaBlack Money in India

12. Money-laundering Money-laundering
Methods & StagesMethods & Stages
There are three stages involved in money laundering;
placement, layering and integration.
.
The process of placement can be carried out through many
processes including:
•Currency Smuggling 
•Bank Complicity 
•Currency Exchanges 
•Securities Brokers 
•Blending of Funds 
•Asset Purchase 

13. Stage II
•Layering – The purpose of this stage is to make it more difficult to detect
and uncover a laundering activity. It is meant to make the trailing of illegal
proceeds difficult for the law enforcement agencies. The known methods
are:
•Cash converted into Monetary Instruments – Once the placement is
successful within the financial system by way of a bank or financial
institution, the proceeds can then be converted into monetary instruments.
This involves the use of banker’s drafts and money orders.
•Material assets bought with cash then sold – Assets that are bought through
illicit funds can be resold locally or abroad and in such a case the assets
become more difficult to trace and thus seize.

14. Money LaunderingMoney Laundering
– – Stage IIIStage III

15. Stage III Stage III
•Integration – This is the movement of previously laundered money into
the economy mainly through the banking system and thus such monies
appear to be normal business earnings. This is dissimilar to layering, for in
the integration process detection and identification of laundered funds is
provided through informants. The known methods used are:
•Property Dealing.
•Front Companies and False Loans
•Foreign Bank Complicity
•False Import/Export Invoices

16. Hasan Ali Khan (born c. 1954) is an Indian businessman. In 2007, Indian authorities
began investigating Khan for suspicion of money laundering. He allegedly stashed
away billions into Swiss bank accounts with the help of Kolkata based businessman,
Kashinath Tapuria using hawala.
Hasan Ali was arrested by Enforcement Directorate and the Income Tax Department
on charges of stashing over 36,000 crore in foreign banks. ED lawyers said Khan had
financed international arms dealer Adnan Khashoggi on several occasions.
[22]

India Today claimed that it had verified a letter confirming the US$8 billion in black
money was in a Swiss bank UBS account, and the government of India too has verified
this with UBS.

Hasan Ali Case – Hasan Ali Case –
Hawala SystemHawala System

17. How the HAWALA System works?How the HAWALA System works?

18. Hawala

19. Central Board of Direct Taxes: is a statutory authority functioning across India under the
Central Board of Revenue Act of 1963. The Member(Investigation) of the CBDT,exercises
control over the Investigation Division of the Central Board of Direct Taxes. The Member
controls the:
Directorate General of Income Tax Investigation
Directorate of Income Tax Intelligence and Criminal Investigation.
Chief Commissioner of Income Tax Central.
The Director General of Income Tax (International Taxation) is in charge of taxation issues arising from
cross-border transactions and transfer pricing. This organisation has been in operation for nearly 50 years, is
primarily responsible for combating the menace of black money, has offices in more than 800 buildings
spread over 510 cities and towns across India and has over 55,000 employees and even employees who are
deputed from premier police organisations to aid the department.
1.Enforcement Directorate
2.Financial Intelligence Unit
3.Central Board of Excise and Customs and Directorate of Revenue Intelligence
4.Central Economic Intelligence Bureau
Regulation & Monitoring Regulation & Monitoring
of Black Money of Black Money

20. •In addition to the primary agencies listed above, India has 10 additional
separate departments operating under the central government of India - such
as National Investigation Agency and National Crimes Record Bureau - to
help locate, investigate and prosecute black money cases. Discovery and
enforcement is also assisted by India's Central Bureau of Investigation and
state police.
•In addition to direct efforts, the Indian central government coordinates its
efforts with state governments with dedicated departments to monitor and
stop corporate frauds, bank frauds, frauds by non-banking financial
companies, sales tax frauds and income tax-related frauds.

21. Government appointed a high-level committee headed by MC Joshi the then CBDT Chairman in
June 2011 to study the generation and curbing of black money. The committee finalised its draft
report on 30 January 2012. Its key observation and recommendations were:
The two major national parties (an apparent reference to Indian National Congress, BJP) claim to
have incomes of merely 500 crore (US$77 million) and 200 crore (US$31 million). But this isn’t
"even a fraction" of their expenses. These parties spend between 10000 crore (US$1.5 billion)
and 15000 crore (US$2.3 billion) annually on election expenses alone.
[
Change maximum punishment under Prevention of Corruption Act from the present 3, 5 and 7
years to 2, 7 and 10 years rigorous imprisonment and also changes in the years of punishment in
the Income Tax Act.
Tax Information Exchange Agreements
To curb black money, India has signed TIEA with 13 countries -Gibraltar, Bahamas,Bermuda,
the British Virgin Islands, the Isle of Man, the Cayman Islands, Jersey,Liberia,Monaco,Macau,
Argentina,Guernsey and Bahrain - where money is believed to have been stashed away. India
and Switzerland, claims a report, have agreed to allow India to routinely obtain banking
information about Indians in Switzerland from the 1st April 2011
MC Joshi CommitteeMC Joshi Committee
on Black Moneyon Black Money

22. The few names of the Swiss bank Account holders, which are displayed below include names of prominent
public figures and people from the corporate world. Though the wiki leaks have claimed another 985 Indian
Account holders in Swiss banks. Some of the prominent names appearing are
Prabodh Mehta[ 28,000 crore],,
Ramdev Pasvan[3500 cr.],Neara Radiya[2,89,990 cr.],
Rajeev Gandhi[1,98,000 cr.],
A Raja[7,800 cr.],
Harshad Mehta[1,35,800 cr.],
Ketan Parekh[8,200 cr],
Rendezvous Sports World[29,800 cr.],
H.D.Kumaraswamy[14,500 cr.],
C.P.Krishnan Nair[4,520 cr.],
Lalu Prasad Yadav[29,800 cr],
Jyotiraditya Madhavrao Scindia[9,000 cr.],
Kalanidhimaran[15,000 cr.],
Karunanidhi[35,000 cr.],
Suresh Kalmadi[5,900 cr.],

23. •According to the data provided by the Swiss banking association ,
India have more black money then the rest of the world combined.
•The black money market situation in India is epidemic. India
currently tops the least for monies in the entire world with almost US
$ 1,456 billion in Swiss banks(USD 1.4 trillion approximately) in the
form of unaccounted money.
Why world invests in SWISS BANKS?Why world invests in SWISS BANKS?

24. Effect on IndiaEffect on India
•Tax evasionTax evasion
•Terrorism ActivitiesTerrorism Activities
•Drug traffickingDrug trafficking
•Counterfeiting of Indian currencyCounterfeiting of Indian currency
•Transnational organized crimeTransnational organized crime
•Human trafficking Human trafficking
•CorruptionCorruption

25. Preventive MeasuresPreventive Measures
•Governments Efforts
–Prevention of Money-Laundering Act, 2002 came
into effect on 1 July 2005
–Proposed Indo-Swiss tax treaty
•Memberships
–Financial Action Task Force (FATF)
–Asia Pacific Group (APG)
–Egmont Group of Financial Intelligence Units

26. Thank YouThank You
Group 9, Divison Group 9, Divison
A A