Bank secrecy moves may force wealthy back onshore

Industry analysts do not expect Switzerland to lose its role of leadership in wealth management since the move toward tax transparency is affecting all offshore centers at the same time.

Switzerland, which manages an estimated $2 trillion of offshore wealth out of $7 trillion, fears that rising financial star Singapore may steal the limelight in wealth management -- although the city state also said it is willing to embrace more information exchange on tax transparency this month.

Also, the changes on tax cooperation will not be introduced overnight and are not as radical as some expected as foreign authorities would still need to give evidence of suspected tax evasion to Switzerland and others to be able to access bank account information.

"We don't anticipate that this announcement will significantly impact the private banking industry, as foreign tax authorities will be unable to make blanket requests for information on all accounts, as was feared," said Jean Schaffner, a tax partner at Allen & Owery.

But the trend toward moving money onshore will continue, Schnaffer said, noting that past tax amnesties in Belgium and other countries helped banks bring clients onshore without losing them.

"This is definitely a tendency. There are a lot of people who have inherited undeclared money from their parents," he added. "The younger generations wants to use the money and they cannot do it if the money is not clean."

Swiss tax lawyers say it has become more and more difficult for holders of undeclared accounts to benefit from these as the money cannot be moved and can only be spent in Switzerland.

"This is dead money. It is money that burns under your fingers," said a tax lawyer who declined to be named.

(Editing by Andrew Callus)