Swiss officials are overhauling a more than 20-year-old system for combating money laundering – by going online. The move comes amid a series of massive scandals at Swiss private banks.
The Swiss government is updating the system for banks to lodge reports of suspected money laundering next year, it said in a statement on Wednesday (in German or French). The move takes a largely paper-based system from laws enacted in 1998 into the digital age.
The overhaul comes years after the banks themselves have moved into electronic communications, and against the backdrop of several huge money-laundering scandals to hit the Swiss industry. Lenders like Credit Suisse, Julius Baer, and Falcon Private Bank have been hit hard after dealing with corruption money from Brazilian «Lava Jato» or 1MDB in Malaysia.
Swiss Not in Step
MROS, the based agency the banks report suspicious money into, is still working with fax and paperwork, as finews.com commented more than two years ago. Bern hadn't kept pace while other offshore centers beefed up: Singapore drew its criminal and regulatory arms closer together in the wake of 1MDB, while the U.K. has set up a joint effort between government, private sector, and police.
Switzerland will use goAML, a five-year-old software tool developed by United Nations drug and crime investigators, from January. The Swiss government said its current system doesn't have the functionality for anti-money laundering investigators to cross-reference data, for example. Data entry is manual, which means the agency's spare resources are used for relatively mundane tasks.
Enforcement Vet Returns
This stands in stark contrast with banks, which have been ordered beef up their technology: Credit Suisse must fulfill a so-called single client view by year-end after it was snagged in several huge scandals last year).
Money laundering laws in Switzerland haven't been updated in more than 20 years. The MROS agency is walled into the federal police force, at arm's length from potential partner agencies like banking regulator Finma or the Swiss intelligence service. It isn't clear why Switzerland didn't adopt the freely-available U.N. technology, which is already used by more than 50 nations including Germany, Liechtenstein, and the Netherlands, until now.
The changes come shortly after Daniel Theleskalf, a veteran watchdog who set up the MROS in 1998, returned to Bern. In 2018, banks sent 30 percent more reports on suspicious activity to MROS – 6,126 in all, the overwhelming bulk of which were raised over suspected corruption. Just 132 reports concerned terrorist financing, which is also MROS' purview.
