As I described in yesterday’s blog entry, Austria has one of the world’s strongest bank secrecy laws. Critics of bank secrecy laws claim that they help criminals shield illicit gains from detection, or tax evaders from paying what they owe.
But, that’s not the reason bank secrecy laws exist. Apart from the natural desire to avoid needless disclosure of a person’s financial affairs to potential thieves or potential litigants, bank secrecy has an important role in protecting depositors from the totalitarian tendencies of governments.
In this regard, Austria’s attitude toward secrecy is honed by bitter experience. The lack of a law guaranteeing bank secrecy made it easy for the Nazis to learn about the financial affairs of Austrians when German armies occupied Austria in 1938. Austrians who tried to protect their wealth from Nazi confiscation by moving it abroad after annexation risked a death sentence. It was not until 1979 that Austria enacted its bank secrecy law, in Article 38 of the Banking Act.
Bank secrecy may never be lifted directly by a foreign investigative agency or a private individual. But, there are important exceptions to insure that bank secrecy isn’t used to protect criminals or anyone engaging in tax fraud. It cam be waived in official criminal proceedings, insider trading investigations and "intentional fiscal violations, with the exception of fiscal petty offenses." Another exception to bank secrecy is if a bank notifies authorities, as required under Austrian law, of its suspicions that a client is engaging in "suspicious transactions."
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Introducing the foreign country…
Where Your Banker Tells Anyone Snooping into Your Account to Take a Hike!
I’ll give you a hintits not Switzerland. It’s not Panama. It’s not even Liechtenstein.
But this countrys bankers have steadily and quietly maintained their clients’ financial privacy for more than half a century!
And those in the know don’t even think of this country as an offshore haven.
So it’s the last place private investigators, contingency lawyers or nosy relatives will look for your wealth.
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And there’s more to Austria’s bank secrecy law than the law itself. Austria’s culture, indeed, the actual German language, provides a level of discretion that simple doesn’t exist in the United States, or in English.
At cocktail parties and other social occasions in the United States, I frequently overhear participants discussing intimate details of their financial affairs—how much money they make, lawsuits in which they’re engaged in, etc. In Austria, in contrast, such matters are rarely discussed outside one’s immediate family.
One reason for this is that Austria is a German speaking country, and the German language has a structure that itself preserves privacy. There is a formal German, the Sie form, used in business and formal relationships. In the Sie world, you generally address associates or superiors by their last name. Sharing intimate financial or personal information with someone on this basis is, for German speakers, almost unthinkable (unless, of course, you’re hiring that person to advise you on a personal or financial matter).
The informal Du form is used with children, young people, and friends. And only in the Du world are the kind of "secrets" that are protected under Austrian bank secrecy law discussed at all.
Taken together, Austrian law and culture provide a powerful shield against the frivolous disclosure of your financial information.
The Austrian bank secrecy law is only one of dozens of "Austrian money secrets" I reveal in my new book, Austria Money Secrets.
Copyright © 2007 by Mark Nestmann
