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Black money probe: Swiss banks mull anticipatory meaures

As probe into suspected black money stashed abroad by Indians gathers steam, banks in Switzerland are running from pillar to post to safeguard their interest while some are also considering financial provisions in their books for possible penal actions and legal costs.

At the same time, banks are also lobbying with the Swiss government to insist on putting in place necessary measures in their information-exchange and administrative assistance frameworks with India for safeguarding the interest of banking institutions during the subsequent prosecution and other legal or regulatory proceedings in the black money cases.

Sources, however, said that the role of some banks, as also that of certain bankers, has already come under scanner for acting in concert with the suspected black money hoarders and also for making ‘safe haven’ promises for their funds.

The suspected lapses on the part of at least three large European banks, including two from Switzerland itself and the third having a significant presence in the Alpine nation, are also being probed for allegedly facilitating re-routing funds of certain Indian corporate houses back into their listed companies as foreign investments.

Capital market watchdog Sebi is probing at least three large global banks and many Indian companies for alleged round tripping of funds by way of multi-layered transactions, while the regulatory noose has further tightened in these cases with involvement of other regulatory and enforcement agencies.

Such transactions are suspected to have taken place in case of 15-20 Indian companies, a senior official said, but refused to disclose their names as also that of the banks saying it might impede the investigations.

Some portfolio managers at some banks, which have a significant presence in the Indian financial markets, could have helped clients route money back into the country as foreign funds using investment vehicles across jurisdictions.

So far, the focus of this Supreme Court monitored probe has mainly remained on the persons and entities from India suspected to have stashed illicit wealth in overseas locations including Swiss banks.

However, as the probe moves further, including by a Special Investigation Team (SIT) with two former Supreme Court judges as Chairman and Vice-Chairman along with members from various investigative and regulatory agencies, the banks are turning wary about possible action against them going ahead.

Senior executives at various banks, including three large ones headquartered in Switzerland and the Swiss units of some major European banks, said that they are considering making financial provisions as anticipatory measures to deal with any action involving them in India’s black money probe.

The banks are also said to be lobbying with the Swiss government that it should ask the Indian authorities to put in place a ‘settlement’ mechanism to deal with the suspected entities, including the banks and their customers, before seeking any assistance in its black money probe.

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