Bangladeshi deposits in Swiss banks hit 28-year low

Infographics: TBS

Money parked by Bangladeshi individuals and banks in Swiss banks hit a record low of 17.7 million Swiss francs (CHF), equivalent to about Tk210 crore, in 2023 – a 68% drop from CHF 55.3 million a year ago.

This is the lowest amount of funds held by Bangladeshis in the Swiss banks since 1996 and marks the second straight year of decline. The Swiss National Bank (SNB) came up with the data in its annual banking statistics for 2023 on Thursday.

Funds held by Bangladeshis with Swiss banks reached a record high of CHF 871.1 million at 2021-end, but have now come down by 98% from that level in just three years.

Swiss banks, once famed for client secrecy, have shifted towards transparency, combating money laundering through initiatives like the Automatic Exchange of Information (AEOI) started in 2018 to curb tax evasion.

Are funds coming back home or going elsewhere?

When asked why Bangladeshi deposits in Swiss banks are decreasing, Md Mezbaul Haque, executive director and spokesperson of the Bangladesh Bank, told TBS that several factors are at play here.

He said various policy measures were taken to attract funds back to Bangladesh. For example, new regulations for offshore banking have been introduced, and interest rates have been hiked significantly.

"Currently, Bangladesh offers higher interest rates than most countries, making it more profitable to invest money domestically," Mezbaul said, noting that more information and time are needed to fully understand the root cause of the deposit decline.

However, former Bangladesh Bank governor Salehuddin Ahmed said he is not optimistic about the decline, hinting that Bangladeshi depositors may have moved their funds to safer locations due to stricter Swiss regulations on hiding illicit incomes.

"Swiss authorities are under obligation to share bank account information with many countries. Hence, Swiss banks are no longer safe to stash away illegal money," he told TBS.

Besides, more attractive destinations like Dubai and some island states, such as Malta, are emerging, offering citizenship opportunities that allow investments in dubious companies, he said.

"Many may have been drawn to these tax havens, which offer passports enabling visa-free entry to hundreds of countries," the former central bank governor explained, attributing the sudden decline in Bangladeshi deposits in Swiss banks to this trend.

Besides the well-known second homes in Malaysia, Thailand is becoming a popular destination for Bangladeshis laundering illicit incomes as Singapore and Hong Kong have recently tightened their rules, Salehuddin pointed out.

Illicit money in Swiss banks! 

In 2023, Switzerland exchanged information with 104 countries on around 3.6 million financial accounts. The exchange took place within the framework of the global standard on the AEOI.

In April 2024, the latest update from OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes indicates that Bangladesh has not yet pledged commitment to the AEOI, whereas neighbouring countries like India and Pakistan have already participated in these exchanges.

Earlier in 2022, the Bangladesh Financial Intelligence Unit (BFIU) sought information on the deposits of a total of 67 Bangladeshis, involved in alleged money laundering. However, Swiss authorities only provided the details of one individual.

According to SNB statistics, the drastic fall in "total liabilities" of Swiss banks to Bangladeshis has been reflected in all types of funds, including deposits from individuals, banks and others.

Bangladeshi individuals deposited CHF 13.97 million in Swiss banks in 2023, marking a 61% decrease year-on-year, while deposits from banks also decreased by 82% to CHF 3.48 million, and other deposits declined by 10% to CHF 0.26 million.

The figures do not indicate anything about the much-talked-about illicit money, if any, parked by Bangladeshis there.

Just like in Bangladesh, the issue of alleged black money in Swiss banks stirs controversy in two neighbouring countries as well. 

Indians' funds in Swiss banks fell sharply by 70% to hit a four-year low of CHF 1 billion in 2023, while Pakistan also saw a dip to a 28-year low of CHF 286 million.