From the white money strategy to the exit letters

Withholding agreements and the white money strategy

After 2009 the Federal Council pursued two lines of policy that were meant to protect the private banking industry without returning to the old secrecy. The first was a series of bilateral agreements on a final withholding tax, known in the press as "Rubik". Under these agreements the Swiss banks would regularize the past by a one-off payment deducted from the client's assets and withhold in future a tax on investment income equivalent to that of the client's state of residence, while the client's identity remained protected. Agreements of this type with the United Kingdom and with Austria entered into force on 1 January 2013. The agreement with Germany failed when the German Bundesrat refused its consent on 23 November 2012.¹ Italy was the obvious next candidate, and contacts on a similar agreement were reported in 2012. They produced no result. The OECD and the G20 were by then preparing a global standard of automatic exchange. The German experience also suggested that an anonymous settlement of the past had become politically difficult in the European Union.

The second line was the so-called white money strategy (Weissgeldstrategie), which the Federal Council set out in a discussion paper on financial market policy in February 2012.² Its aim was that Swiss banks should no longer accept untaxed assets. A draft law presented in 2013 would have required financial intermediaries to verify the tax compliance of their clients when accepting new assets and in cases of suspicion, with the possibility of refusing or terminating business relationships. The draft was abandoned after the consultation, when the Federal Council decided to rely on the forthcoming automatic exchange of information and on the inclusion of serious tax offences among the predicate offences to money laundering.³ The white money strategy thereby survived as a policy objective and as a practice of the banks, without becoming a statutory duty of its own.

FINMA and the cross-border risk

The supervisory foundation of the banks' new behaviour was laid by FINMA. On 22 October 2010 the authority published a position paper on legal and reputational risks in cross-border financial services. It required supervised institutions to subject their crossborder services to a thorough analysis of the regulatory conditions in each target country and to develop service models that complied with them.⁴ FINMA identified among the sources of risk the possibility that a financial intermediary or its employees might be accused under foreign law of participating in the tax offences of foreign clients. It stated that, although the Swiss supervisory law did not as such require compliance with foreign law, violations of foreign law could call into question the guarantee of irreproachable business conduct required of a Swiss bank.⁵ For a Lugano bank with Italian clients the message was unambiguous. The undeclared Italian client was a legal and reputational risk that the board of directors had to identify, limit and monitor.

The Swiss Bankers Association and the individual banks translated the supervisory expectation into internal directives. From about 2012, and with increasing urgency after 2014, Swiss banks wrote to their clients resident in countries that were moving towards the exchange of information. These letters asked for evidence of tax compliance, typically a confirmation from an Italian tax adviser or a copy of the quadro RW, and announced that the relationship would otherwise be restricted or terminated. In the practice of Lugano they became known as exit letters (lettere d'uscita). The banks also restricted cash withdrawals and transfers to third countries in order to avoid being accused of assisting the transfer of undeclared money to jurisdictions that did not yet exchange information. The figures for voluntary notifications under the savings agreement, which rose for Italy from 915 in 2011 to 3,013 in 2012, reflect the beginning of this pressure.⁶

Notes

1. "Steuerabkommen mit Grossbritannien in Kraft" and related notes, law.ch, https://law.ch/lawnews/tag/abgeltungssteuer/ (entry into force of the agreements with the United Kingdom and Austria on 1 January 2013; rejection by the German Bundesrat on 23 November 2012). The Swiss-Italian exploratory talks of 2012. ↩
2. Swiss Federal Council, Diskussionspapier Strategie für einen steuerlich konformen und wettbewerbsfähigen Finanzplatz, 22 February 2012. ↩
3. Swiss Federal Council, consultation draft on the extension of due diligence obligations to prevent the acceptance of untaxed assets, February 2013, and its decision of 2014 not to pursue the draft. ↩
4. FINMA, "FINMA veröffentlicht Positionspapier zu Rechts- und Reputationsrisiken im grenzüberschreitenden Finanzdienstleistungsgeschäft", press release of 22 October 2010, Italian version, https://www.finma.ch/it/news/2010/10/mm-finma-positionspapier-rechtsrisiken-20101022/. ↩
5. FINMA press release of 22 October 2010 (above), on the risk that "un intermediario finanziario o i suoi dipendenti siano accusati, in base al diritto estero, di partecipazione nei reati fiscali commessi da clienti stranieri". ↩
6. Federal Tax Administration, savings statistics 2010–2012 (above). The practice of the exit letters is described in SUPSI, Centro di competenze tributarie, seminar "Restrizioni bancarie" of 17 April 2015, https://www.supsi.ch/documents/d/deass/20150417_restr-bancarie, which notes that "diverse banche svizzere hanno posto in essere significative restrizioni" on cash withdrawals and transfers. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.