ECONOMIC SPOTLIGHT - SWISS BANKING SECRECY
Swiss lawyers have largely headed off an
attempt to restrict banking secrecy and curb their powers to
act for clients despite the new, revised code of banking
conduct agreed by the Bankers' Association this week, analysts
said.
    The "laundering" of drug and "insider dealing" money and
controversy over accounts of the ousted Philippine and Haitian
Presidents have hurt the standing of Swiss banks recently and
strained international relations, particularly with the United
States.
    Critics said the new code fell well short of demands for
reform, doing little to close a key loophole in the requirement
that banks know the identity of their customers.
    The Social Democratic party, a member of the ruling
four-party coalition, which forced an unsuccesful 1984
referendum to curb banking secrecy, complained the code still
fell short of the legal controls they wanted.
    "It looks a slight improvement on paper, but the same tricks
will still be possible in practice," Felix Meier, a senior party
official, told Reuters.
    In contrast, Swiss lawyers are happy with the new code.
    "Apart from a few nuances, we are very pleased with the
agreement," said Max Oesch, a senior official of the Swiss
Lawyers Federation, which has fought a long campaign to prevent
any curbs on lawyers' ability to act for their clients.
    "It has shown that the 4,000 Swiss lawyers who do a good job
should not be punished for the sake of getting at the one or
two black sheep."
    The role of lawyers has been at the centre of long running
discussions on the renewal of the so-called "convention of
diligence," a voluntary code of banking conduct introduced in
response to a major banking scandal here in 1977.
    With secrecy back in the public eye due to the Ferdinand
Marcos case and a Swiss bank link to the recently busted "Pizza
Connection" international heroin ring, officials at the Banking
Commission said earlier this year they wanted a tightening of
rules on anonymity.
    However, the changes in the new code, which comes into
operation in October, have been minor.
    Clients will still be able to keep their identity secret
from the banks provided their lawyer pledges that the
relationship with his client "is not only of a temporary nature"
and involves provision of other legal services.
    The Lawyers' Association said this part of their business
is very minimal anyway. In the majority of cases, people had
perfectly legal private or commercial reasons for not wanting
the bank to know their identity, Oesch said.
    The Banking Commission, despite its earlier demand for a
virtual abolition of the loophole, also said it was happy with
the new code.
    However, critics complain that the agreement does not go
far enough to restrict the role of lawyers and could still be
circumvented by criminals.
    "No other group in society is allowed to regulate itself as
much as the banks," complained Meier of the Social Democrats. "I
hope that the Banking Commission exercises its proper control
function."
    However, other parts of the agreement won praise.
    In particular, banks will also now be required to demand
the identity anyone doing more than 100,000 Swiss francs worth
of business with them, even if they do not have an account at
the bank. Until now, the threshold was 500,000 francs.
    Peter Kluser, head of the National Bank's legal department,
which had argued for a lower limit, said the move could help
combat the use of banks to "launder" or hide the criminal origin
of money.
    The new code also clarifies the legal status of a tribunal
able to impose heavy fines on banks which do not respect the
code.
 REUTER
