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Switzerland mulls new bill to check black money flow to banks

Switzerland Federal Council has asked its finance ministry to submit a consultation draft to meet its goal of preventing banks from accepting untaxed funds from their clients

New Delhi/Bern: Often accused of providing safe havens to black money from India and other countries, Switzerland has proposed a new bill to prevent its banks and other institutions from accepting 'untaxed assets' from their clients and put in place a stricter due diligence regime, reports PTI.


The Switzerland Federal Council, the apex decision making body of Swiss government, has asked its finance ministry, the Federal Department of Finance (FDF), to submit a consultation draft at the start of 2013 to meet its goal of preventing banks from accepting untaxed funds from their clients.


A decision to this effect was taken by the Federal Council at a meeting on Friday in Bern.


The move follows rising global pressure on Switzerland to act against its banks giving 'safe haven' to overseas entities in name of client confidentiality.


In India as well, the issue of alleged hoarding of black money in Swiss banks has been a matter of political debate.


While a revised tax treaty has come into force between the two countries for exchange of information on untaxed assets and money laundering related activities, the rules require sufficient information for any banking details to be shared and many requests face the risk of getting rejected in the name of 'fishing expeditions'.


The Swiss Federal Council said in a statement that it "is stepping up its efforts to combat abuses in the area of money laundering and taxation".


"With the planned implementation of the revised recommendations of the Financial Action Task Force (FATF), serious tax offences will be qualified as predicate offences for money laundering in future. In the event that they suspect money laundering, financial intermediaries should also report these cases to the Money Laundering Reporting Office Switzerland," it added.


The Federal Council further said the content of the proposed consultation draft and its schedule would be in line with the implementation of the revised FATF Recommendations.


"At the same time, the Federal Council took note of the FDF's appointment of a group of experts which is to draw up the basis for the longer-term orientation of the financial market strategy," it said.


The new bill incorporates other laws such as tax laws and the Code of Obligations (legislation on companies limited by shares) along with the Anti-Money Laundering Act. Besides, the Swiss government would work on a new set of principles of enhanced due diligence requirements to prevent the acceptance of untaxed assets by banks and other financial intermediaries.


The extent of the examination depends on the risk posed by the contracting party, which would be similar to the due diligence requirements for combating money laundering and terrorist financing. Financial intermediaries will be obliged to issue self-regulation provisions in compliance with specific legal parameters which are to be recognised and monitored by the supervisory authority.


There will also be self-regulation measures equivalent to legal provisions in terms of their impact, while a supervisory authority will be empowered to issue corresponding regulations in the absence of any self-regulation.


"Within the scope of the due diligence requirements to prevent the acceptance of untaxed assets, it is envisaged that the financial intermediary will be able to request a self-declaration from clients on the fulfilment of their tax obligations.


"The self-declaration will serve as an indicator of the tax-compliant conduct of the client. However, there is no self-declaration obligation," the Federal Council said.


West Bengal too opposes direct cash transfer

Jyotipriya Mullick, West Bengal's Minister for Food and Supplies says the purpose of setting up the Food Corp of India to provide cereals and pulses at subsidised rates to the people would be defeated since beneficiaries could use the cash for other purposes than food

Kolkata: After Odisha and Tripura, West Bengal has also opposed the Centre's direct cash transfer to bank accounts of beneficiaries claiming it would lead to breakdown of the existing public distribution system and closure of the Food Corporation of India (FCI), reports PTI.


"The basic objective of the public distribution system to arrest hunger among the poor will be defeated if the beneficiaries are provided cash instead of cheap food leading to closure of the Food Corporation of India," Minister for Food and Supplies Jyotipriya Mullick said.


He said that the purpose of setting up the FCI to provide cereals and pulses at subsidised rates to the people, would be defeated since beneficiaries could use the cash for other purposes than food.


"The decision is wrong. FCI will close down if cash transfer is implemented," he said.


Noting that only 24% of the population in the state have Aadhaar numbers, he said, "How can it be possible when a large number of people in West Bengal do not have Aadhaar?"


Earlier, Odisha Food minister PK Deb had dubbed the step as impractical saying many people in his state did not have bank accounts.


Tripura Food and Civil Supply minister Manik De had said that he had written to the Food and Public Distribution Minister KV Thomas to withdraw the proposal and clarify how the new system would help the poor.


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