Switzerland: The Gnomes of Zurich

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The law was adopted in 1934 to thwart Nazi spies hunting German assets that had fled and were hidden abroad. Later Geneva was regarded as the financing center for both extremes in the Algerian war—the French O.A.S. and the Algerian F.L.N. Today some U.S. officials believe that the banks shield dol lars that have evaded U.S. taxes and foreign aid funds diverted by grafters in underdeveloped nations.

The Swiss will lift the secrecy veil if a depositor is accused of a serious crime, but they refuse to worry about tax dodgers. "We cannot act as a policeman for foreign governments," argues Schaefer. He says that his bank provides numbered accounts only for people known to its officers—"not Al Capones or South American generals" —and that it turned down deposits from the Dominican Republic's ousted Trujillo family. But he allows that "not all banks in Switzerland apply the same standards."

Bankers in and out of Switzerland agree that relatively few depositors really have something to hide. Even so, plenty of people are willing to make quite a sacrifice either for anonymity or, more often, for the security the country offers their nest eggs. Under a law passed in 1964, the Swiss banks pay no interest on foreign deposits—and last week, in a special referendum, Swiss voters extended that law for another two years.

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