Swiss Money Trail: From Gold & Diamond to Stocks & Bitcoins

As Switzerland commits to cooperate in India's fight against black money, a new strategy of 'layering' through gold and diamond trade has come to light at Swiss banks, to thwart any attempt for identification of real beneficiary owners of funds entrusted with them.

The activities and avenues being used for such 'layering' include diamond trade, gold and other jewellery exports, stock market transactions and also fund transfer through virtual currencies like bitcoin.

At a time when Switzerland has been facing intense pressure to act on the alleged use of Swiss banks for stashing black money, the government data of the Alpine nation shows that India has become the top destination for its gold exports with trade worth close to 6 billion Swiss francs (about Rs 40,000 crore) since the beginning of this year.

According to government and banking sources, there is a growing suspicion that a portion of gold and diamond trade is being used to route funds from Swiss banks to India and other destinations.

At the same time, the banks in Switzerland are now getting an undertaking signed by their clients, where the customer agrees to take responsibility for any possible regulatory or administrative compliance with international norms.

The development regarding alleged use of diamond, gold trade, stock market transactions and bitcoins for layering of black money comes at a time when there has been an intense debate about Swiss authorities' assistance in India's fight against black money.

A senior Swiss government official recently said that Switzerland was ready to help India with data under its 'spontaneous information exchange' initiative on a proactive basis, although the European country continues to resist any information-sharing on requests based on 'stolen data'.

The statement triggered a major debate and Switzerland's Secretariat for International Financial Matters (SIF) issued a public statement on this matter. Some reports went on to suggest that Swiss authorities have already shared a list of Indians alleged to have stashed black money, but any such development was denied by both the government.

When contacted, SIF spokesperson Mario Tuor confirmed that the Swiss authorities "are in contact with the Indian government", but refused to share further details.

In reply to emailed queries, Tuor said that Switzerland is looking forward to working together with the new government in India in its fight against tax evasion.

Tuor, however refused to comment on his reported remarks that Switzerland has not shared any list with India, neither it was preparing one for sharing with the Indian authorities.