Ministry of Finance denies media reports of alleged black money held by Indians in Switzerland

Some reports appeared in the media on 06/18/2021 indicating that Indian funds in Swiss banks increased to over Rs 20,700 crore (CHF 2.55 billion) at the end of 2020 against Rs 6.625 crore (CHF 899 million) at the end of 2019, reversing a 2-year downtrend. It was also said to be the highest deposit figure in the past 13 years as well.

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Finance ministry refutes media reports on alleged black money held by Indians in Switzerland

Media reports allude to the fact that the reported figures are official figures released by banks to the Swiss National Bank (SNB) and do not indicate the amount of allegedly highly controversial black money held by Indians in Switzerland. Also, these statistics do not include money that Indians, NRIs or others might have in Swiss banks on behalf of third country entities.

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However, customer deposits actually declined from the end of 2019. Funds held through trustees also fell by more than half from the end of 2019. The largest increase is in ‘Other receivables on the bank’. customer base”. These are bonds, securities and various other financial instruments. Black money: The Ministry of Finance refutes reports of an alleged increase in funds held by Indians in Switzerland.

It is relevant to underline that India and Switzerland are signatories to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAAC) and the two countries have also signed the Multilateral Agreement between Competent Authorities (MCAA) under which the automatic exchange of Information (AEOI) is enabled between the two countries for sharing financial account information every year starting with calendar year 2018.

Exchanges of information on financial accounts concerning residents of each country took place between the two countries in 2019 as well as in 2020. Taking into account the existing legal framework for the exchange of information on financial accounts (which has a strong deterrent effect on tax evasion by undisclosed assets abroad), there does not appear to be a significant possibility of increasing deposits in Swiss banks from undeclared income of Indian residents.

In addition, the following factors could potentially explain the increase in deposits:

a Increase in deposits held by Indian companies in Switzerland due to increased business transactions

b Increase in deposits thanks to the activity of the branches of the Swiss Bank located in India

vs Increase in interbank transactions between Swiss and Indian banks

re A capital increase for a subsidiary of a Swiss company in India and

e Increase in liabilities related to outstanding derivative financial instruments

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