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taxpayer fails to submit a tax return or when a valid tax return is incomplete (e.g. as a result of false or incomplete entries). Tax fraud is committed when, for the purposes of tax evasion, falsified or non-genuine records, such as accounts, balance sheets or income statements and other statements of third parties, are used to deceive. The tax return itself is not considered to be a document. Tax fraud can also exist without documents being falsified when wilful deceit is practised to evade tax. Switzerland provides legal and administrative assistance in tax matters, when the foreign procedure concerns an offence that is regarded as tax fraud in Switzerland.41. The Money Laundering Law of 10 October 1997 is the legal basis for combating money laundering.42 Pursuant to Article 6 of the Act, financial intermediaries are obliged to clarify the economic background and the purpose of a business relationship or transaction if there are indications that assets stem from illegal operations. In such a case, the intermediary must also inform the Money Laundering Reporting Office (MROS).
The 24 cantonal banks, which are fully or partly owned by the cantons, concentrate on credit, deposit business, and mortgages in their local areas43; they account for over 30% of domestic banking business; 21 cantons guarantee their bank's liabilities. In addition, cantonal banks benefit from preferential treatment regarding capital requirements and taxation. However, these special rules have been under examination for a number of years with a view to eventually abolishing them. Only two institutions have the right under the Mortgage Bond Act of 1930 to issue mortgage bonds: the Central Bond Issuing Body of the Swiss Cantonal Banks (Pfandbriefzentrale der schweizerischen Kantonalbanken) and the Mortgage Bond Bank of Swiss Mortgage Institutions (Pfandbriefbank schweizerischer Hypothekarinstitute). Only cantonal banks may participate in the former, while participation in the latter is limited to banks whose head office is in Switzerland and for which Swiss mortgage loans represent at least 60% of their balance sheet assets.
The Union of Raiffeisen Banks is an association of 390 small regional banks, each of which operates independently, pooling local savings and lending money to local businesses. The Union is organized as a cooperative with more than 1.5 million people holding cooperative shares. The client assets of the Raiffeisen banks amounted to Sw F 94 billion in 2007. Furthermore, some 76 regional savings banks, most of them associated with the RBA Holding AG, are active in local retail banking.
PostFinance, a branch of state-owned SwissPost, offers financial services in some 2,469 post offices and 29 advisory centres. With its 2,700 staff, PostFinance had assets of nearly Sw F 44 billion in 2007, spread over more than 3.3 million accounts. As PostFinance is not a bank as defined by the Banking Law, it may only offer financial services for which no licence is required. Thus, payment transactions represent its main business area, whereas various financial services, such as deposits or loans, are offered on behalf of Swiss banks.
41 The Swiss Penal Code distinguishes three categories of offences. The relevant criterion is their gravity as expressed by the maximum penalty they carry. Thus, "felonies" are offences carrying custody of more than three years, "misdemeanours" are offences with a maximal penalty of no more than three years of custody or financial penalty, and 'contraventions' are petty offences carrying a fine. With regard to these different categories of offences, according to Swiss law, tax fraud belongs to the category of 'misdemeanours', which means it is considered as an offence with a maximal penalty of no more than three years of custody or financial penalty. In contrast, tax evasion in Switzerland is generally punished with a fine and is therefore considered as a contravention and not as a misdemeanour (as would be the case for tax fraud) under the Swiss Penal Code. It is incumbent upon the taxation authorities and not the prosecution authorities to implement proceedings against tax evasion.
42 RS 955.0.
43 Each canton, except for Solothurn and Appenzell Ausserrhoden, has its own cantonal bank.