Secret Swiss accounts hide Jordan, Kenya and Greek riches: Swissmoney

Elif Kaban, Reuters, London

Jordanians were last year the main holders of secret Swiss fiduciary deposits that help hide tax income offshore with holdings valued at 16 percent of their country's Gross Domestic Product, a survey showed on Friday.

The survey by UK-based industry researchers Swissmoney showed other heavy users of the system were Kenyan citizens whose Swiss fiduciary deposits were equal to 5 percent of Kenya's GDP, followed by Israelis and EU-member Greeks each with holdings worth 3 percent of their country's respective GDPs.

The cash flows "perhaps reflect lack of confidence in local currencies and local banking systems," the researchers wrote.

Fiduciary deposits are one of the key weapons of Switzerland's powerful banking system which is based on secrecy and manages an estimated third of the world's offshore wealth.

They are also disliked by the European Union which sees them as a way to hide taxable income since they offer wealthy foreign clients anonymity and freedom from taxation.

A sudden increase in the volume of fiduciary deposits from citizens of a country that is impoverished or short of foreign exchange may also signal high-level corruption, bankers say.

Fiduciary deposits are money foreigners put in banks in Switzerland, where tax evasion is a civil and not a criminal matter. But unlike conventional accounts, they get transferred to banks abroad anonymously in the name of Swiss banks in order to avoid Swiss withholding tax on interest gains.

Swiss banks charge a fee for providing this service.

Swiss-style bank secrecy is under threat from international pressure led by the EU, which wants Switzerland to help it fight tax evasion by providing information about bank accounts.

British Finance Minister Gordon Brown is also pushing for information exchange, though Swissmoney said Britain was the leading beneficiary of fiduciary deposits after Switzerland.

Britain and its dependent territories accounted for a quarter of fiduciary deposits placed with Swiss banks, and 30 percent of that was then placed with banks on UK territory.

Official data on deposits in the UK tax haven of Guernsey confirms this. In the first quarter of 2001, for example, Swiss fiduciary deposits there showed the largest growth.

Quoting Swiss National Bank data, Swissmoney said fiduciary deposits at banks in Switzerland stood at $336 billion in September, 80 percent of it from non-residents. Some 58 percent was denominated in dollars, 24 in euros and 10 in Swiss francs.