Swiss Bank Account Opening for Commodity Trade Finance

1. Income from commodities trading exceeding income from banking business since 2011

“Figures published by the Swiss National Bank (SNB) show that the income from commodities trading have surpassed the income from financial services since the year 2011. “

In Swiss offshore banking, trading finance is part of commercial client business. It comprises the banking business with all companies domiciled in Switzerland. By now, at least 50% of the growth of the Swiss GDP is already attributable to commodity trading. 14% of all income made by the banks come from the business with commercial customers. This trend will only accentuate.

The total income from commodity trading for Swiss banks represents a massive contribution to the stability in Switzerland because it has been highly resistant to crisis.

“Over the past few years, the commodity trade finance business is becoming increasingly important and attractive for Swiss banks.“

This is where the highest income potential is waiting to be seized. Its estimated volume amounted to around 4,000 billion Swiss Francs in the year 2010, a fourfold increase in only 3 years. Switzerland is home to around 60 trading companies employing more than 12,000 persons, mainly in Geneva, Zug and Lugano.

2. Commodity Trade Finance or Private Banking – Which sector has the higher growth rates?

The globally increasing prosperity means that commodity trading will become even more important. The offshore banking industry are not the only ones raking in the profits. The entire Swiss economy will greatly benefit from these growth rates. Boston Consulting Group and the Swiss Bankers Association are forecasting an impressive growth in income of at least 4 to 5% per year for the commodity trade finance business. 

Swiss Bankers Association: Switzerland as a commodity trading centre

http://shop.sba.ch/999930_e.pdf

      1. Switzerland is the global leader in the trade with crude oil, metals, crops, sugar and coffee

      Crude oil trading

      In 2015, Switzerland seized the top position in the trade with crude oil, with a market share of 25%, followed by London with 35% and New York with 20%. One third of the entire global trade in crude oil is bought and sold in Geneva. 

      Metal trading

      Switzerland’s market share is even higher when it comes to the trade in metals: 60% of all trades take place in Switzerland, followed by Singapore and Shanghai with 20% each. 

      Gold refineries

      According to an estimate by the Swiss Federal Parliament, 70% of gold worldwide is refined and stored in Switzerland. 

      Trade with crops, sugar and coffee

      Switzerland is also leading the global trade ranking with a market share of 35% for crops, 50% for sugar and 60% for coffee. 

      file:///G:/New%20Website%20Project/Sony%20Stick%20Dez.%202016/Sony_32GU/Projects%20and%20Providers/WEBPAGE/NEW%20Content%20swiss%20banking%20lawyers/Artikel/Infographic%20Oil%20Metal%20Sugar%20Coffee25122016.pdf

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      Infographic Oil Metal Sugar Coffee: Market shares at trading places worldwide confirm Switzerland is the dominating market place.

       

4. How Switzerland’s offshore banking industry relegated England to second place

As far back as in November 2010, the Financial Times reported that Geneva relegated London to second place for the physical trade in crude oil. The leading companies relocated their operations to Geneva, Zug and Lugano and open Swiss bank account. The world’s best traders have also left London behind and moved their residences to the tax paradise Switzerland. This development has picked up speed since the Brexit referendum. Offshore banking in Switzerland is now the undisputed number 1 in commodity trading activities worldwide.

“We assist commodity traders in relocating to Switzerland and taking advantage of Swiss lump-sum taxation arrangements”

Ever since the Brexit referendum, our phones keep ringing with inquiries from London. The people calling us are looking for services relating to the expatriation of private persons and relocation of companies from London to Geneva, Zug or Lugano. 

CTA = Income

We assist highly qualified commodity traders in relocating their tax residence and families to Switzerland. Our services include approaching the Swiss authorities and negotiating attractive conditions for lump-sum taxation for our new clients from London. We also assist with the procedures for gaining residency and work permits and finding the best private schools for their children. Switzerland has a long-standing tradition and excellent reputation for having the best private schools and boarding schools. This tradition means that your children are guaranteed an international and multicultural education at the highest level. 

We can also assist in finding exclusive accommodation in preferred locations and much more, including providing an exclusive Centurion Card without invitation. Thanks to our excellent network with top-ranking Swiss bankers, we can offer exclusive properties before they are not advertised on the open market. Discretion and outstanding quality are our hallmarks. Only the best will do to meet and exceed the discerning demands of our international private clients.

Opening a Swiss bank account for international trading companies – we can assist you in finding a trade finance bank in Switzerland that meets your demands and expectations and will accept you as a client. We will help you in finding the bank that matches your requirements for open Swiss bank account.

Our focus is on assisting small and medium-sized trading companies in finding a tax-efficient domicile for their company in the best-suited canton of Switzerland. Before starting our search, it is important to know as much as possible about our client. This enables us to provide tailor-made advice and bespoke introductions to our professional partners. We will introduce international trading companies to precisely those Swiss banks that offer the know-how needed for the individual trader. 

The step of relocating the official domicile of international trading companies to Zug, Schwyz or Lucerne is only one of a number of steps that are necessary in this context. The major banks in Switzerland have a policy of only accepting trading companies with revenues of 25 million Swiss Francs upwards and equity of more than 10 million Swiss Francs. Smaller commodity traders are frequently approaching the wrong banks that do not have any experienced trade finance specialists. But exactly these specialists are what is imperative for success from the first minute. But apart from major banks, there are a number of smaller banks with expertise in the field and that are well placed geographically and internationally to meet the high requirements. 

Compliance risks in commodity trading

Due to the specific compliance requirements for country risks and corruption risks in the commodity trading industry, these banks will appreciate it all the more when presented with an already completed initial compliance due diligence at the first meeting.

Contrary to popular opinion, raw materials trading and related financing are in fact regulated by many new rules, sanctions, policies and initiatives prescribing strict rules for a professional due diligence assessment. A high degree of transparency with regard to the volumes and prices is already in place, simply because must commodities are traded at public stock exchanges. 

Commodity traders and banks often forego a business transaction if they are not sufficiently familiar with their counterparty. Nobody wants to take unnecessary risks and risk a painstakingly built reputation. We take the allegation that the commodity trading sector is riddled with corruption very serious, but we know from our experience that the allegation is usually untrue. 

Nevertheless, we are fully equipped for offshore banking in Switzerland and work with the relevant instruments for compliance and money laundering prevention, such as the “Corruption Perception Index (CPI) http://www.transparency.org/cpi2015

We assess each customer in accordance with the guidelines published by the non-governmental organisation „Transparency International“ (http://www.transparency.org).

What is the Corruption Perception Index (CPI)?

Since 1995, “Transparency International“ has been publishing a new annual „Corruption Perception Index” (CPI), which ranks countries according to the perceived level of corruption ascertained from surveys and expert interviews. The CPI defines corruption as the abuse of office for the purpose of obtaining personal advantages. The CPI currently covers 168 countries and rates them on a scale from 100 (no corruption at all) to zero (totally corrupt).

CPI-Index

https://en.wikipedia.org/wiki/Corruption_Perceptions_Index

Quelle Wikipedia

7. How do we address the risk of corruption with Swiss bank account opening?

To fight corruption effectively and to protect our customers, we apply the whole bandwidth of regulations. These include, for example, the

  • Federal Law against Unfair Competition (UWG)

https://www.admin.ch/opc/de/classified-compilation/19860391/

  • OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

http://www.oecd.org/corruption/oecdantibriberyconvention.htm

  • United Nations Convention to Combat Corruption

https://www.admin.ch/opc/de/federal-gazette/2007/7417.pdf

Some of these regulations have only been passed very recently, the timing and modalities of their implementation is still unclear. Swiss bank account opening will not be an easy task. Nevertheless, we are already preparing ourselves for the new transparency requirements imposed by the EU and the USA. There are however also countries, such as China, which explicitly prohibit such disclosure. 

“Depending on the individual circumstances, we may advise our clients to steer clear of certain countries and to organise the purchase transaction in another country.”

8. How do we protect our customers in potential future corruption proceedings in the offshore banking industry?

By prevention – meaning the record of exculpatory evidence

We prepare a special set of documents for our clients, the so-called 

record of exculpatory evidence, 

which ensures that you never find yourself in trouble when being asked for evidence. 

We document all of our due diligence efforts with regard to preventing corruption down to the minute detail. We ensure our clients have a flawless set of documents that enables them to provide evidence that results in immediate and full exculpation. This is a very effective toll in taking the burden of our clients’ shoulders. 

In the event an act of bribery does happen unexpectedly, our customers can rest assured that any doubts will be eliminated by the information in this set of documents. They can easily and instantly provide solid evidence that they have in fact made all necessary arrangements to prevent corruption. 

Companies are by law required to document their efforts in monitoring corruption risks. 

“Those who do not fight against corruption at an early stage and as a prophylactic measure run the risk of incurring high fines that may endanger the existence of the company.”

9. Swiss bank account Compliance with international sanctions and lists

Many transactions with a Swiss bank account are denominated in US dollars (USD). This directly results in U.S. law being applicable. Many Swiss banks have already experienced what it means to feel the “long-arm jurisdiction“ of the USA and had to pay fines in the billions to the USA for breaching US law.  Under U.S. law, the fact that a transaction is denominated in USD is enough to establish US jurisdiction.

  • Sanctions and embargoes in commodity trading:

The most important sanctions and embargo-lists for commodity trading are:

OFAC-Sanctions (Office of Foreign Assets Control, OFAC)

https://www.treasury.gov/resource-center/sanctions/Pages/default.aspx

Swiss SECO-sanctions and embargo

https://www.seco.admin.ch/seco/de/home/Aussenwirtschaftspolitik_Wirtschaftliche_Zusammenarbeit/Wirtschaftsbeziehungen/exportkontrollen-und-sanktionen/sanktionen-embargos.html

United Nations Sanctions 

https://www.un.org/sc/suborg/en/sanctions/information

EU sanctions 

https://eeas.europa.eu/topics/common-foreign-security-policy-cfsp_en

“We work closely with attorneys in the USA who are specialists in the field of OFAC sanctions. Their offices are just across the road from the “White House” in Washington, DC. We only work with lawyers that have solid and long-standing experience from hundreds of cases concerning OFAC sanctions.“

To ensure the transactions conducted by our clients satisfy the stringent compliance requirements, we only work with the best OFAC specialists. Their expert advice does not come cheap, but is well worth the cost considering the enormous fines of many millions that can be imposed for breaches of sanctions.

  1. Why is Switzerland such a popular location for commodities trading?

Switzerland is known around the world for its stable economic and political environment. 

The high quality of life, 

the neutrality, 

the well-trained and multilingual staff, 

the excellent transport infrastructure, 

the central location, 

the high quality of life,

the best asset protection set-up with a Swiss bank account and top wealth management

the most important offshore banking system.

the best time zone make the country attractive to efficient commodity trading and attract many international companies. 

Laws are respected in Switzerland. Those who break the rules are punished. The courts work swiftly and are relatively inexpensive.  The legal certainty that is so crucial for commodity traders is warranted. 

“Some cantons offer incredibly low taxes, such as the cantons of Zug, Schwyz and Lucerne with a corporate tax rate of less than 20%. The Swiss tax system is extremely competitive in comparison to other countries. “

Swiss banks have a long tradition in providing finance for commodity trading and offshore banking, which dates back to the year 1839 with companies like Henry Nestlé, André & Cie, Salomon Volkart and many more. In the beginning, commodity trading was mainly concerned with cotton and coffee. The free movement of capital after the Second World War and the expansion of the Société Générale de Surveillance (SGS) and other similar businesses resulted in this business growing exponentially. 

The oil crisis in the 1970s was the ultimate breakthrough for Switzerland on a global scale. After the iron curtain came down in the 1990s, Russia and the CIS countries joined the markets (Commonwealth of Independent States of the former Soviet Union).

Commodity trading is a very capital-intensive business. This is where a high-quality financial centre with the appropriate trade finance know-how is of immense value. 

“Switzerland is such a finance hub. Letters of credit and other payment guarantees issued by banks provide strong impetus for the continued growth of this business. “

The ideal location factors are attracting a growing number of international market players and suppliers in the area of commodities trading. Trading activity goes hand in hand with logistics services, such as shipping the commodities and the actual financing of the transported goods. This is why logistics companies, international organizations, international law firms, banks, insurance companies and inspection companies can be found in close vicinity of the trading centres.  

“Net income from commodities trading was CHF 2 million in the year 2002, increasing more than ten-fold to CHF 25 billion by the year 2015.”

“Take advantage of this boom in commodity trading. Join the ranks of successful business that have already relocated their company to Switzerland.”

“If you are thinking about relocating your commodity trading company to Switzerland, call us before you start doing everything on your own.”

What kind of assistance can we offer you?

  • We can establish a Swiss public limited company with a Swiss bank account for you. 
  • We can introduce you to the bank that is best suited for your needs and that will exceed your expectations. We can open Swiss bank accounts with banks that are specialised on trade finance. 
  • Your advisers will all be senior bankers who have been successful in the trade finance and offshore banking business for many years. 
  • We will negotiate a lump-sum tax for you with the tax authorities (lump-sum taxation and relocation services) and arrange for the necessary residency permits. 
  • We will introduce you to the best private schools that offer an international education to your children. 
  • We can make the necessary personal referrals for being accepted into exclusive business and sports clubs.
  • We will provide you an exclusive AMEX Centurion Card immediately connected to your Swiss bank account with best in class asset manager. 
  • Our offshore banking services also include finding representative office space, advisory on real estate purchases and insurance issues.
  • You will reap the benefits of our experience and network with offshore banking. As the proverb goes, we learn from mistakes. It doesn’t say they necessarily have to be our own mistakes. We help you circumventing mistakes with Swiss bank account opening.
  • We are your one-stop one-shop advisers that can bring your business to a higher level. 

 

If you would like to investigate trade finance and offshore banking solutions with Caputo & Partners, please use the private email of Mr. Enzo Caputo and send him and email: 

enzo.caputo@swiss-banking-lawyers.com

If you want to pose your questions over the phone, feel free to call him now on his private number: 

+41 79 543 85 93

The first consultation is free of charge.