Financial deposits held by Bangladeshis in Swiss banks fell by over a quarter in 2017 after Switzerland bent to pressure from the US and the European Union and relaxed its secrecy law.
Following the May 2016 development, the Federal Banking Commission of Switzerland said it would abolish the so-called “Form B” bank accounts that had enabled corrupt and criminal figures such as dictators, drug barons, arms dealers to hide their ill-gotten wealth in Switzerland without disclosing their identities.
“They (Swiss banks) are not the safe haven they once were,” Policy Research Institute (PRI) Executive Director Ahsan H Mansur said.
“They have lost their appeal as they now publish the depositors’ data in their annual report and are also cooperating with foreign governments.”
According to the Swiss National Bank’s annual report of 2017 released yesterday, the total amount of deposits shrank by 27.29% last year to just over CHF481 Swiss Francs (Tk4,065 crore).
Some economists who attribute this drop to the increased transparency of the Swiss banks argue that most of the black money is now being invested in real estate or in other tax haven countries.
“There are other ways of siphoning off money abroad and we still cannot place a definitive number on the exact amount that’s been taken out of the country judging by the bank deposit amounts,” Mansur said.
The decline of 27.29% from 2016 does not necessarily mean there is less capital flight from Bangladesh.
“People invest in real estate (and then) transfer the amount to their children’s account, who are foreign citizens,” Mansur said.
“If there is political stability in the country and the investment atmosphere was more favourable, then this capital flight would actually come down.”
The former caretaker government advisor, AB Mirza Azizul Islam, believes the latest figures from the Swiss National Bank are actually an indication that capital flight is on the wane.
“It may be due to strengthening of monitoring by Bangladesh Bank and customs intelligence, who have taken a tougher stance on the import of capital machinery and other means of capital flight,” he said.
“In stopping the capital illegal flight, the government and the concerned authorities have to identify the possible source and means of capital flight and has to take necessary steps against it.”
The economist also urged reforms to the import policy, saying the “lion’s share” of illegal capital flight happens through over or under-invoicing of capital machinery.
