In order to survive twentieth-century financial upheavals such as the stock market crash of 1929 and subsequent depression, achieving legal recognition for bank secrecy was the way the Swiss government could maintain its beliefs and refusal to interfere in the private affairs of its citizens. The Banking Act of 1934 accomplished this goal. The law was enacted in large part because both Germany and France attempted to press Swiss banks into divulging depositor information in the name of the “good of the state”.
One issue of the time that reinforced the passage of this law came during the era of Hitler when a German law stated that any German with foreign capital was to be punished by death.
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Many European Jews deposited their life savings in Swiss banks when WWII broke out during the 1930s and 1940s. And, after the war, many were not allowed to recover their assets because their documentation was gone.
Swiss banks have come under fire in recent years because of their actions towards Jewish account holders after World War II and also because money that German Nazis plundered from defeated countries and their prisoners was held in Swiss banks.
According to a report on Nazi theft of Jewish assets, during WWII “between January 1939 and June 30, 1945, Germany transferred gold worth around $400 million ($3.9 billion in today’s values) to the Swiss National Bank in Bern.” It is believed that much of this gold was stolen from Jews and sent to Switzerland to be melted down and used to finance the war.
“Although there is no evidence that Switzerland or other neutral countries knowingly accepted victim gold … at least a small portion of the gold that entered Switzerland and Italy included non-monetary gold from individual citizens in occupied countries and from concentration camp victims or others killed before they even reached the camps.” This gold was deliberately mixed with other gold when re-smelted.
After the war, to ensure that there could be no Nazi return to power, the Allies held or disposed of German external assets to prevent their return to German ownership or control.
The 1946 Allied-Swiss Washington Accord was held by the United States, United Kingdom and France. Under the Washington Agreement, Swiss negotiators agreed to transfer approximately 250 million Swiss francs ($58.1 million) of gold into the Tripartite Gold Commission’s (TGC) monetary gold pool. So the TGC established a proportional redistribution system which established that each country would receive approximately 65 percent of its recognized claim.
he problem of dormant accounts and heirless assets was not directly addressed in the Washington Agreement. Although no action was taken until 1962 a Swiss Federal Decree required banks, law offices, trustees and others to comb through records to discover dormant accounts belonging to foreign or stateless persons who were deemed victims of racist, religious or political persecution. As a result, a total of nearly 9.5 million Swiss francs (an approximate 1962 value of $2.4 million) was reported and about three-fourths was transferred to the rightful heirs.
The current investigation by the Swiss Bankers Association, begun in 1995, is the most recent attempt to find remaining dormant accounts and heirless assets. The investigations turned up approximately $32 million in 775 additional dormant accounts opened prior to 1945, though not all were of European origin.
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