Switzerland has begun overhauling its money-laundering laws. The move comes as the alpine nation finds itself in the midst of huge money-rinsing scandals such as Brazil's Lava Jato and Malaysia's 1MDB.
The Swiss government on Friday opened a nearly four-month public consultation period on draft law to beef up its money-laundering defenses. The move comes as scandals like 1MDB, Uzbek telecoms, FIFA, and Brazilian graft roil the alpine nation's finance sector.
Switzerland scraped by in its most recent through the FATF, an international money-laundering monitoring group spearheaded by the G7, in 2016. However, examiners made several key recommendations for Switzerland, which has hardly updated its anti-money laundering laws since rolling them out more than 20 years ago.
Tighter Rules
In parallel, Swiss financial regulator Finma has pursued a far more openly aggressive stance on money-laundering. The overseer sanctioned a series of banks including Banco della Svizzera Italiana, or BSI, and Gazprombank in Switzerland, and is looking into heavyweight Julius Baer.
Specifically, Swiss banks will be required to widen due diligence when clients ask to establish vehicles like trusts and other companies. The draft law also requires banks to verify who the beneficial owner of accounts is, which confirms case law but is not yet required by law.
The proposed law also addresses associations, a quirk of Swiss law meant for not-for-profit entities like community groups but has also long shielded soccer's global governing body FIFA from scrutiny.
Cash Limits
The government is attempting to force those associations at risk for money-laundering and terror financing to enter the commercial register, which would add an additional, albeit light, layer of oversight. The draft law also seeks to crack down on the use of criminal funds to buy precious metals and gems by lowering the cash payment threshold.
In one of the most flagrant violations in recent years, Falcon Private Bank's Abu Dhabi owners effectively hamstrung the Swiss bank in order to launder graft money. Its reputation in tatters, the bank now faces a staff exodus, mounting losses, and most recently rumors of an impending sale.
Unlike in Singapore or the U.K., which have responded to recent scandals by drawing prosecutors and money-laundering agencies nearer together, Switzerland's draft law includes no such plans.
