Switzerland's Federal Council wants to strengthen country's the fight against money laundering with more transparency. It needs to catch up with other countries.
At its meeting today, the Federal Council filed a draft law to strengthen the fight against money laundering for consultation, according to a statement from the State Secretariat for International Financial Matters (SIF).
New Nationwide Register
Switzerland is a laggard when it comes to obligations for trustees and the naming of the real owners of corporations, having repeatedly come under criticism. The proposed measures will bring the location up to international standards.
The new law provides for a federal register of the actual owners and due diligence requirements for particularly risky activities in legal professions. The Federal Council hopes this will strengthen Switzerland's integrity and competitiveness as a financial and business location.
Strengthening the System
Legal entities are abused by organized crime to conceal assets and facilitate money laundering, tax evasion, and sanctions evasion, around the world, the Federal Council said. It proposes strengthening existing measures to combat money laundering.
The improved transparency offered by the proposed law would allow law enforcement agencies to determine more quickly and reliably who actually is the owner of a legal entity.
Targeting Precious Metals Trading
Other measures address circumventing or violating sanctions under the Embargo Act, with sanctions against Russia currently a major issue for the financial industry.
The threshold for cash payments in precious metals trading will be lowered to 15,000 Swiss francs ($17,000) from 100,000 francs. Cash payments exceeding that are possible, but subject to due diligence requirements. For cash real estate transactions, notoriously susceptible to criminal activities, all payments are now subject to due diligence requirements regardless of their amount.
Traces Lead to Switzerland
Although Swiss banks are actively reporting such transactions, the country hasn't fully shed its reputation as a money laundering hub. International corruption scandals involving Malaysian sovereign wealth fund 1MDB, Venezuelan state oil producer PDVSA, and its Brazilian counterpart Petrobras, saw the trail leading to Switzerland and local financial service providers.
Local prosecutors are taking direct action against banks. Last year, the Federal Criminal Court in Bellinzona fined Credit Suisse two million Swiss francs in the trial of a Bulgarian drug ring for deficient anti-money laundering efforts, which the bank is appealing. Investigations against other firms are pending.
