Switzerland is known for its financial sector's opacity, but is this culture of secrecy coming to an end? Reuters

Once was a time when what was Swiss was as clear as an alpine lake.

Its Gruyère could be relied upon to be meltingly delicious in a fondue. The finely crafted watches of Zurich could be relied upon to keep the time to the second. And the bankers could be relied upon to keep the wealthy's cash safe, secure and secret from the eyes of foreign authorities.

As the Swiss celebrate their National Day in 2014, the cheese is still great, the watches still tell the time -- but the bankers can't keep your money hidden anymore.

The world is pushing Switzerland into a financial identity crisis. Its major information-sharing deals with the likes of the U.S., U.K. .and France have left the country's publicity-shy account holders nervous.

The whole point of keeping your money in a Swiss bank account was to keep it hidden from your home country's tax officials. So it's no surprise that there has been capital flight from Switzerland to other tax havens, where no such information-sharing agreements have been made.

And it wasn't just the world's tax dodgers who found shelter in between the Swiss Alps, where the low-tax regime favors nonresidents. Cigar-puffing, desk-banging, dissident murdering despots also knew they could find a friendly financier in Switzerland, who would blind their eyes to international sanctions.

Everybody's favorite sartorial disaster and now-deceased Libyan dictator Moammar Gadhafi was known to have had funds stashed in Switzerland. So, it is rumored, does Cuban revolutionary Fidel Castro. And dead bespectacled North Korean tyrant Kim Jong Il did too.

Colonel Gaddafi ruled in Libya for 42 years
Colonel Gaddafi ruled in Libya for 42 years Reuters

Tax Information Deals

Philippe Zimmermann, a partner at EY Financial Services Switzerland, said that there is a definite "trend to tax transparency".

"As a result, we see that money is flowing out from several foreign banks which exit the Swiss market due to increased regulation and the costs associated with it," he told IBTimes UK.

In 2011, the Swiss agreed a landmark deal with U.K.. officials. It allowed the U.K.. tax office HMRC to see what U.K.. taxpayers held assets in Switzerland. This was in order to send them a bill for any past unpaid tax and to ensure future payments flowed accordingly.

Similar deals have been forged with France and Singapore as the hunt for Switzerland's hidden wealth spreads. And the U.S. signed a tax treaty with Switzerland that offered an amnesty to the country's banks who admitted to helping Americans dodge taxes.

In exchange for immunity from prosecution for assisting tax evasion, the Swiss banks had to tell the U.S. Internal Revenue Service how they hid Americans' assets, hand over data on secret accounts, and pay financial penalties.

Intense Pressure

According to WealthInsight, a financial research firm in London, Swiss banks manage $2.1 trillion of offshore wealth.

But WealthInsight noted in a report the "Swiss wealth management model is under intense pressure" because of growing public anger over offshore finance -- particularly in light of government austerity measures -- and policymakers' attempts to assuage that rage.

To make matters worse, the Swiss have antagonized their key trading partner the European Union by more-or-less trashing the current agreement between the two.

Switzerland gets largely unfettered access to the EU's market of 500 million citizens on the condition that it subscribes to some key principles, including the free movement of labor, and it pays an entry fee.

People walk behind the European Union's flag
EU flag Reuters

But the Swiss voted in a February 2014 referendum to restrict European migration, which will see the end of free moving labor into the country.

So the EU has initially retaliated by freezing co-operation with Switzerland in certain areas, such as its exclusion from the Erasmus foreign student program.

And it is weighing up how to respond more broadly, which raises significant questions for the Swiss economy and the financial sector within it.

Around two-thirds of Swiss trade is with the EU. The EU, because of the effective Swiss cancelation of its terms of entry to the market, can now remold its agreement with Switzerland -- which could lead to new tariffs or a higher entry fee for the central government.

With the current uncertainty around Switzerland's vital relationship with the EU, and what it all means for the domestic economy, those with money to invest may be doubly put off of Swiss banks when taking greater tax transparency into account as well.

Wrong Path

There is still more money flowing into Switzerland than there is going out. Though the most recent available data is somewhat dated, it is still after the movement towards tax transparency first began.

According to the Swiss National Bank, foreign direct investment into the country was 671.5 million Swiss francs ($739.8 million) in 2012, up from 606.8 million Swiss francs ($668.6 million) in 2011.

And in spite of the nearing end of Swiss financial opacity, all is not lost for the Swiss banking system, which has produced such big names as UBS and Credit Suisse. EY's Zimmermann said Switzerland "remains an attractive country for several reasons".

"A bank relying on discretion and banking secrecy would definitely be on the wrong path," he said.

"The strength of the Swiss banking sector relies primarily on the quality and skills of its workforce, the stability of the Swiss currency and its political system.

"In addition, the labor market is relatively flexible and the regulatory environment is recognized to be on a high standard and reliable."

Perhaps the future of Swiss banking lies not in its secretive past, but on a new paradigm of reliability -- that rare troika in finance of honest, fair and transparent dealing.