Investigation Of German Bank Subsidiaries In Switzerland

by Ulrika Lomas, Tax-News.com, Brussels

24 March 2009

German Finance Minister Peer Steinbrueck has opened a new front in his attack on Swiss bank secrecy laws. Last November the German regulatory body for financial services, Bafin, was ordered by the Ministry of Finance to initiate an enquiry into 31 Swiss subsidiaries of German banks with regard to the supervision of their duty of care to prevent money-laundering.

This initial enquiry has uncovered several hundreds of accounts for foundations established under Liechtenstein law and other entities whose activities 'lacked transparency'. New regulations under revised German Securities Laws have toughened up the requirements for banks to prevent money-laundering, and further special investigations were commissioned to audit compliance to the new regulations with regard to Liechtenstein foundations’ accounts.

It is reported that Deutsche Bank subsidiaries in Switzerland operate the majority of these accounts, but spokesmen for the bank were unable to comment. Other banks including Commerzbank and its subsidiary Dresdner Bank are also keeping quiet on the matter. From April onwards, the German banks must direct their subsidiaries to close the accounts of any such foundations whose activities are considered insufficiently transparent. Bafin has given notice that in future it will continue to monitor the activities of German banks’ foreign subsidiaries for compliance.

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