The Russian invasion of Ukrainian has led to the Swiss government imposing sanctions on Russia and wealthy Russians close to Vladimir Putin by freezing their Swiss bank accounts. Lately, Switzerland is also “closely monitoring” Chinese wealth in Swiss banks following the intelligence input – that Beijing is considering supplying Russia with lethal weapons, such as drones and munitions. According to a Financial Times report, Switzerland’s tough stance on sanctions has fueled concern among wealthy Chinese about whether keeping their money in Switzerland is safe.
In recent weeks, a number of events have brought the possibility of sanctioning China closer, including the spy balloon incident and Beijing’s possible supply of lethal weapons to Moscow. The US Secretary of State Anthony Blinken has publicly warned Beijing against the fomenting war in Ukraine, saying it has intelligence that China will supply Russia with lethal weapons. At the same time, the United States is also preparing to share this intelligence with its allies.
Although the Swiss government has not disclosed the size of Chinese assets in the country, a batch of documents released to the International Consortium of Investigative Journalists in 2014 showed that Swiss banks set up accounts for many Chinese political elites and their children. The batch of declassified documents shows that at least 20,000 wealthy people from mainland China and Hong Kong own offshore companies involving high-level Chinese “red second-generation” families. At least five family members of the Politburo Standing Committee members own companies in offshore financial centres such as the British Virgin Islands and the Cook Islands.
Some Swiss banks have stated that they were now playing a “war game” on how to deal with the fallout incase Beijing’s relations with the West deteriorated significantly. According to the report, all Swiss wealth managers would have to weigh the impact of the sanctions imposed by the Swiss authorities, which was high on the board and executive’s agenda.
Over the past few hundred years, Switzerland has managed about a quarter of the world’s private wealth due to its strict bank secrecy system and neutral political stance. Tens of thousands of wealthy people worldwide like to open secret accounts in Swiss banks and transfer their vast wealth and funds to Switzerland.It not only makes tax avoidance possible for rich people worldwide but also criminal activities such as money laundering, providing a safe hiding place for for organized crime and illegal funds of dictatorships. For this reason, Switzerland has been under pressure from Europe, the United States and other countries.
Since Russia invaded Ukraine last year, the Swiss government has moved in with the European Union to impose sanctions on Russia and wealthy Russians. According to the Swiss State Secretariat for Economic Affairs, about 7.5 billion Swiss francs ($8 billion) in Russian funds are currently frozen under Swiss sanctions. The data showed that some 7,500 Russian billionaires had deposited swiss francs CHF 46.1 billion in assets in Switzerland. Bank accounts of wealthy Chinese could be the next target.