The BJP government has a quantum of solace on its hands after months of lobbying the Swiss government for co-operation in its efforts to unearth "black money" -- more formally termed as unaccounted wealth. Some positive noises finally emanated from Switzerland on Friday, when the European nation ratified automatic exchange of financial account information with India, marking another step in the war on unaccounted money stored in overseas bank accounts.
Switzerland has also promised a stepped-up cooperation in New Delhi's hunt for unearthing black money, financial daily Economic Times (ET) claimed in a report.
Friday's decision follows hectic parleys between India and Switzerland for introduction of the AEOI (Automatic Exchange of Information) on tax matters under the guidance of G20, OECD and other global organisations, ET said.
"It will now be possible for India to receive from September 2019, onwards, the financial information of accounts held by Indian residents in Switzerland for 2018 and subsequent years, on an automatic basis," the ET report said.
With this move, India should be able to access transactions by Indians with Swiss banks after September 2019.
The exchange of information will be carried out based on the Multilateral Competent Authority Agreement (MCAA) on the Automatic Exchange of Financial Account Information, which in turn, is based on the international standard for exchange of information developed by the Organisation for Economic Co-operation and Development (OECD).
A prominent instance of Switzerland's financial regulator, Swiss Financial Market Supervisory Authority (FINMA), breaking its bank secrecy laws to cooperate with enquries from other countries occurred on February 18, 2009. On this date, FINMA ordered Swiss bank UBS to hand over the files of nearly 300 clients to US authorities. This weakening of the country's strict bank secrecy rules in an effort to end a damaging probe into its biggest bank, prompted clients to pull out billions of francs from its accounts and leave in droves.
The Federal Council of Switzerland said in a statement on Friday that it will prepare a situation report before the first exchange of data planned for autumn 2019.
Prime Minister Narendra Modi had gone to Geneva, Switzerland, on June 6 to seek the support of the central European country for India's membership bid into the 48-nation Nuclear Suppliers Group (NSG). Convincing the Swiss authorities to help India unearth black money worth crores of rupees stashed away in Swiss Bank account was a key item on his agenda.
In the run-up to the 2014 Lok Sabha polls, the BJP had promised to bring back black money from India stashed abroad. Modi's detractors have used the topic to target the BJP-led government, saying the PM has done little to fulfil his poll promise.
The BJP then moved to enact a new law -- 'The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015' -- to tackle the issue of unaccounted wealth stashed away abroad.
Last year, the finance ministry had noted that that there is no official estimation regarding black money of Indians deposited in Swiss banks.
Experts say that despite the automatic exchange mechanism coming in with Switzerland, it will be still difficult to extract information quickly from countries where unaccounted money is stored.
Often, illegal money stacked in offshore accounts are in countries which have strict identity protection laws and they take action only if a crime has been committed within the ambit of their local laws.