Switzerland loves cash

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Switzerland loves cash

Article published in La Liberté newspaper on December 19, 2022.

Unlike France and Italy, there are no limits on cash payments in Switzerland.

Pierre-André Sieber

Buying consumer goods with cash? Italy has just increased the maximum amount payable in cash by the average consumer (see below), officially to counter the greed of card and digital payment institutes. And in Switzerland? Unlike its neighbors, the land of banks does not apply a ceiling to cash transactions.

A Swiss peculiarity. In 2020, National Councillor Jean-Luc Addor (UDC/Valais) even attempted to enshrine the right to pay in cash in the Constitution, but the Federal Council opposed the idea, deeming the existing legal provisions to be sufficient. “The Federal Law on Currency and Means of Payment requires everyone to accept Swiss banknotes in payment, without any limit on the amount,” confirms Lisa Desjardins, financial compliance expert at Claritis in Geneva. “This does not mean, however, that there is no control over the risk of money laundering, but the system is based on the seller’s diligence and not on limiting the means of payment.

No limit of 1,000 euros as in France or 5,000 euros as in Italy. So, from Romanshorn to Geneva, for example, buying an ultra-expensive luxury car with francs is allowed. “It would indeed be possible to buy a luxury car in cash, but if the amount exceeds 100,000 Swiss francs, the buyer must know his or her identity,” stresses Lisa Desjardins. “In this case, checks against money laundering and qualified tax offences are the responsibility of the trader, i.e. the seller. He must ensure the buyer’s identity by means of an identity document, a copy of which he keeps for 10 years”. The merchant must also verify the beneficial owner of the sum. If the buyer acquires a car on behalf of his or her spouse, to whom the money used to pay for the car belongs, the latter must also be identified by the seller as the beneficial owner.

According to Lisa Desjardins, paying in thousand-franc bills for something as expensive as a luxury car is an unusual transaction. In this case, regardless of the amount, the law requires the seller to clarify the background and purpose of the purchase. All these steps must be documented, and the documents kept for 10 years.

The cash limits applied by our neighbors are designed to force consumers to pay digitally. Fiscal transparency is a winner, but paying by card and similar means delivers buyers’ consumption data. Is it a question of playing tax security off against privacy? “As regards the means of payment, these two elements are not necessarily opposable in Switzerland, as qualified tax offences can occur on a much wider scale than ordinary commercial transactions,” adds Lisa Desjardins. “In addition, a recent study shows that Swiss consumers are increasingly abandoning cash payments in favor of digital payment methods, despite the trail left by these payment methods.” On the other hand, the expert concedes that the exchange of information between countries for tax purposes – known as “automatic exchange of information” – raises the very real question of data protection for the citizens concerned by these exchanges of information.

The other side of the coin

Capping cash amounts to counter the financing of terrorism or organized crime also has a downside. “This measure primarily affects small consumers and retailers who, in a difficult economic climate, are either disappearing or being taken over by large groups or criminal organizations,” explains Marina Weaver, Director at Global Risk Profile in Geneva. “The main transactions are already carried out in cryptocurrencies or international bank transfers. On the other hand, cash movements used by governments for their ‘special operations’ benefit from protections that strengthen the bridges between transnational crime, finance and, above all, states.”

The Global Risk specialist believes that the real issue is not to demand even greater tax transparency from individuals, but rather to demand greater financial responsibility from governments and public authorities, as well as from elected representatives. The recent affair involving Eva Kaili, Vice-President of the European Parliament, is a case in point. Several compromising bundles of banknotes found at his home, among other places, prompted the Belgian public prosecutor’s office to open an investigation into money laundering.

Make way for digital fraud

Waging war on cash bill payments? Marina Weaver pouts. “It would be an illusion to believe that limiting the use of cash would limit crime,” she asserts. “Statistics show exactly the opposite! With a shift to digital payments – in Sweden, for example, following the introduction of standards limiting cash payments – crimes linked to this method of payment, such as attacks on banks, ATMs and vans, have indeed fallen by more than 80%, but what they fail to mention is that digital fraud has increased by more than 90%.”