Industry Desk: Money parked by Bangladeshi individuals and enterprises in Swiss banks went down by 2.38 percent to 603 million Swiss francs (CHF) in 2019, in contrast to 617 million a year ago. The Swiss National Bank (SNB) came up with the data in its annual report for 2019 on Thursday.
Pakistan was able to bring the figure down by over 50 percent to only 359 million Swiss francs and India by over 5 percent to 892 million CHF.
While Pakistan saw a significant fall in its funds in Swiss banks, Bangladesh has come second in South Asia after India in terms of depositing money with the banks for the first time since the SNB began to reveal the country’s name in its reports 24 years ago. Only Afghanistan in the region saw a positive growth in the total deposited amount in Swiss banks last year.
According to the report, its data for “total liabilities” of Swiss banks to Bangladeshis considers all types of funds of Bangladeshi clients in Swiss banks, including deposits from individuals, banks and other enterprises.
The report explained that the deposit as “liabilities” of Swiss banks or “amounts due to” their clients, are the official figures provided to the SNB by the Swiss banks. The figures do not indicate anything about the much-talked-about illicit money, if any, parked by Bangladeshis there.
The data analysis shows deposits shifted from individuals to banks for Bangladesh over the years.
In 1996, Swiss banks’ liabilities to Bangladeshi individuals were nearly 26 million CHF, while it was 12.41 million to banks. Now, the amount from banks skyrocketed to over 580 million CHF, and the amount from individuals dropped to 19 million CHF, indicating that individuals are keeping less money in Swiss banks.
“We should be cautious about how we interpret it. The amount is not big if it is a consolidation of deposits by Bangladeshis in Swiss banks all over the world,” said Muhammad A Rumee Ali, former deputy governor of the Bangladesh Bank.
Swiss banks have branches in many countries, such as India, the United Arab Emirates, Singapore, the United Kingdom and the USA where hundreds of thousands of Bangladeshis live, he noted.
On the decline in deposits, Ali identified two reasons – the United States’ access to information in the Swiss banking system and almost zero interest rate – for it.
Dr Ahsan H Mansur linked the fall in deposits to the recent data revealing behaviour of Swiss banks.
On the 2.38 percent drop in Bangladesh’s deposits, he said, “This is not a big change. Nowadays, people park less money in Swiss banks as they publish their data on a regular basis.”
He added, “Currently, Swiss banks are cooperating with different foreign governments too.”
On the issue of hiding illegal money, Dr Mansur said, “Not many people are now using Swiss banks as a medium of hiding black money as it no longer remains a safe haven for them.”
He further added, “There are many other ways such as offshore accounts in other countries’ financial institutions or banks for hiding money, so, why will they go for Swiss banks?”
There is a debate every year when the SNB comes up with its annual report that also discloses data about Bangladeshi firms and individuals.
Finance Minister AMA Muhith, in parliament in July 2017, blasted media reports that linked the SNB report with money laundering. He said Bangladesh had a lot of businesses with Switzerland and the amount shown was not big.
A senior Bangladesh Bank official with vast knowledge on anti-money laundering efforts said the report showed all Swiss banks’ liabilities to banks and individuals.
“If any of our banks opens Nostro accounts in any Swiss bank, the amount will be liabilities to the Swiss bank. Non-resident Bangladeshis’ deposits in Swiss banks anywhere will also be their liabilities,” said the official requesting not to be named.
Asked how Bangladesh can get information about reported deposits, he said Swiss banks do not do it. “It can be possible when a depositor is convicted as a criminal; then we can seek information through our attorney general’s office,” he said.
There are 246 banks in Switzerland. At the end of 2019, of these banks, 216 made profits amounting to 13.1 billion Swiss francs while the remaining banks registered losses, according to the SNB report.
Bangladesh lost a staggering Tk 63,924 crore ($7.53 billion) a year between 2008 and 2017 to trade misinvoicing, equivalent to nearly one-fifth of the country’s tax collection target for the current fiscal year, said the Global Financial Integrity (GFI), a US-based think-tank, in its report in March this year.
The GFI said the average value of Bangladesh’s trade misinvoicing was 17.95 percent of the country’s total trade with 135 developing countries and all of its trading partners during the same period.