Swiss banks are conducting a 'purge' among clients from the post-Soviet space
Bank accounts in Swiss banks were blocked, criminal cases were opened. Later, the US and the European Union imposed sanctions against Russia. This again added work to bank verification services. As a result, banks hurried to get rid of problematic clients who appeared on sanctions lists.
In 2015, Russia enacted the Federal Law of November 24, 2014, on amendments to the taxation of profits of controlled foreign companies and income of foreign organizations, the so-called 'CFC law.' According to this law, Russian businessmen are required to notify tax authorities of their participation in foreign companies (usually offshore companies) if their shareholding exceeds 10%.
For now, according to data published in the Russian press, Russians are not in a hurry to make such declarations, but in the meantime, also in 2015, another law was adopted requiring Russian resident citizens to inform tax authorities about accounts opened abroad and movements of funds in them. Here, it is no longer about companies, but about personal accounts opened for individuals.
Parallel to events in other countries, Switzerland also enacted new rules related to combating money laundering. Thus, from January 1, 2016, tax evasion of 300,000 francs or more can be classified as a crime and serve as grounds for initiating criminal proceedings under Article 305bis of the Swiss Criminal Code (money laundering).
All these events prompted Swiss banks to take active measures to identify clients who, in the banks' view, are at risk, and to get rid of them. It should be noted that a similar thing happened several years ago, when the US tax administration waged a real hunt not only for undeclared bank accounts of its citizens in Switzerland, but also for Swiss bankers themselves, using a variety of methods, including arrests, searches, threats, provocation, financial incentives for 'whistleblower bankers,' etc.
UBS and Credit Suisse, which suffered greatly from the pressure of US authorities (the fines imposed on them are very high), hurried to get rid of all their American clients, even those who paid taxes properly and never had problems with their home country's tax administration. The banks closed accounts even for those Americans who lived, worked or studied in Switzerland, i.e., they were ordinary retail banking users (paying for rent, phone, insurance, current expenses), not private banking clients. These were very small accounts, small amounts. Moreover, accounts were closed for Swiss citizens who had the misfortune of obtaining a US residency permit or even a student visa. Any connection with the US caused panic among bankers at UBS and Credit Suisse.
It would be a mistake to think the situation has improved. Even now, opening an account for Americans in these two banks is almost impossible. Absurd situations still arise; accounts of Swiss citizens are closed if a connection to the US is found. Simply by going abroad to study for a year, you risk receiving a letter from the bank asking you to transfer your money to another financial institution within three months.
Will the same happen to citizens of former USSR countries, primarily Russian citizens?
As already noted, the same UBS and Credit Suisse, as well as several other Swiss banks, began a certain purge as early as the end of 2013. First, they got rid of clients with political risks. Then economically less interesting clients (small private banking accounts). Now, banks have started demanding that clients provide proof that they have paid taxes in their home country. If accounts are held in the name of companies, banks ask Russians for evidence that they comply with the provisions of the CFC law.
It is possible that if Russian authorities aggressively fight undeclared capital abroad, large Swiss banks may make a strategic decision not to deal with clients from Russia at all. This rule could also extend to other former USSR countries.
Such a dramatic scenario is unlikely, but nevertheless cannot be completely ruled out. This would not mean a complete closure of the Swiss banking market for clients from the post-Soviet space: many small and medium-sized Swiss banks gladly welcomed American clients expelled from UBS and Credit Suisse. Those same banks are waiting for clients from the former USSR, there is no doubt about that.