Bangladeshi deposits in Swiss banks soar over 33-fold to 589mn francs

Funds held in Swiss banks under the name of Bangladesh have soared more than 33 times in a year, reaching 589.5 million Swiss francs.

The sharp rise in deposits in 2024 marks a dramatic rebound from the previous year, when Bangladeshi-linked holdings had plunged to just 17.7 million francs, or Tk 2.65 billion -- lowest in 28 years, down from 55.2 million francs in 2022.

The SNB report, which offers an annual country-wise breakdown of assets held in Swiss financial institutions, attributed the new figure to liabilities owed by Swiss banks to Bangladeshi individuals and institutions. The 2024 figure is the fifth-highest since 2015. The highest was in 2021, when deposits reached 871.1 million francs.

Switzerland’s banking sector, historically known for strict confidentiality laws, does not disclose individual account details. However, under anti-corruption agreements, the SNB publishes aggregated country-level data each year.

Economists and transparency advocates are divided on the nature of the funds. Former World Bank lead economist in Dhaka, Dr Zahid Hussain, said the spike suggests the movement of institutional rather than personal funds.

“The SNB data clearly shows the transfer originated from Bangladeshi banks, indicating that most of the accounts are institutional,” he said.

“This raises the question -- is it driven by trade? But Bangladesh doesn’t have substantial commercial ties with Switzerland to justify such a volume.”

Zahid argued that if trade doesn’t explain it, the increase likely represents capital flight.

“If the money was moved bank-to-bank, was it approved by Bangladesh Bank? That volume cannot be transferred without regulatory clearance,” he said.

“During periods of weak governance, large sums can be sent abroad in phases in a matter of days, especially with top-level facilitation.”

He added: “We hear of hundreds of crores being sent abroad for student tuition alone. Anything is possible -- irregularities can occur even under formal rules.”

Under the recently ousted Awami League government, deposits rose steadily, peaking at 661.9 million francs in 2016. After a dip to 481.3 million francs in 2017, deposits surged again to 617.7 million francs in the 2018 election year.

The main reason wealthy individuals around the world are drawn to Swiss banks is their strict confidentiality policy. Under Swiss law, banks are not obligated to disclose client information.

They are also not required to verify the source of their client’s income. However, Switzerland has recently relaxed its secrecy, especially for foreign accounts.

Not all of the funds deposited in Swiss banks under Bangladesh’s name are necessarily laundered. Some suggest that along with commercial transactions through banks, expatriate Bangladeshis may also deposit money in Swiss banks under Bangladesh’s name.

The SNB report also recorded 12.6 million francs in deposits held by individuals and entities from Bangladesh, down from 13.9 million francs a year earlier.

An additional 8.62 million francs was invested in Swiss capital markets via asset managers, mostly unchanged from 2023.

The trend of rising Bangladeshi deposits in Swiss banks began in 2006, when holdings crossed 100 million Swiss francs for the first time — the final year of the BNP-Jamaat government. It jumped again in 2007, under the military-backed caretaker administration, reaching 243 million francs.

According to organisations working on anti-corruption and good governance in Bangladesh, most of the funds held by Bangladeshis in Swiss banks are illegally acquired and laundered into the country.

However, economists do not see any direct link between the dip in funds deposited in Swiss banks and a decline in money laundering from Bangladesh.