Switzerland has been the banking destination of choice for moguls, dictators, and other ultrahigh net worth individuals for decades. While the Swiss tout that their rolling hills and craft chocolate compel customers to flock to the land of the Alps, it is the discretion of their finance professionals that truly sets Switzerland apart. As the rest of the world demands greater transparency, the Swiss banking industry is forced to reevaluate its value proposition to clients.

Swiss banks began to flourish during World War II. While surrounding countries were decimated, Switzerland’s neutrality afforded it relative security, making it a dream destination for those wishing to secure their assets. In the 1970s and 80s, a wave of decolonization swept the African continent, and new-money dictators were looking for ways to stash their, often stolen, wealth turned to Switzerland.

However, in 2007, Bradley Birkenfeld, a UBS employee, violated Swiss bank secrecy laws and disclosed information about several UBS Swiss clients expected of tax evasion to the US Internal Revenue Service, the first domino in the collapse of bank secrecy.

The United States decided it had had enough of its citizens evading taxes by stashing assets offshore at an estimated cost of over $450 billion annually to the US Treasury. In 2010, Congress passed the Foreign Account Tax Compliance Act (FATCA), requiring mandatory disclosure by all foreign banks of all assets of US tax residents. Switzerland was outraged at this extraterritorial law that threatened an industry making up four percent of the country’s GDP and generating over 115,000 jobs. Nonetheless, nearly all Swiss banks decided to comply, rather than absorb the penalty of 30 percent withholding on all US-originated payments to all the bank’s account holders.

Inspired by FATCA, the OECD passed comparable legislation, the Common Reporting Standards (CRS). CRS requires the automatic exchange of information between the 105 participating tax authorities, dramatically reducing tax evasion opportunities, even for the worldly wealthy.

These two pieces of transparency legislation damaged the Swiss banking industry, eroding its competitive advantage of secrecy. From 2005 to 2017, the number of Swiss banks shrank from 179 to 112.

Switzerland also faces competition from new financial centers looking to become the darlings of ultrahigh net worth clients. Asian centers such as Singapore and Hong Kong promise superior service and competitive tax rates. Ironically, US states such as Nevada are also becoming havens, especially for wealthy Latin Americans, as they are one of the few developed markets who have not signed onto CRS, despite inspiring the legislation.

That said, Switzerland has continued to think of creative ways to cater to its banking clients’ needs. For instance, the government of Geneva co-invested in the construction of a freeport. Originally designed a short-term stopover for assets with an undetermined destination so customs duties would not be dully charged, the freeport now serves as a long-term storage facility for high-value alternative assets, such as valuable artworks and vintage wines. Unlike cash in a bank account, these assets to not need to be reported to any tax authority. The pseudonyms used on storage lockers and the installation of viewing rooms bear Switzerland’s signature stamps of secrecy and service.

Switzerland in the coming years will need to delicately balance protecting the privacy of its elite client base and its own reputation in the international community. It remains to be seen if the Swiss banking sector will retain its competitiveness in this brave new world of global transparency.

Gig economy operator (ex- Uber , Rocket Internet) turned advocate for better conditions. Jesuit values Georgetown, MBA Stanford GSB. Twitter: @AlissaOrlando