Swiss lawmakers passed a revision to anti-money laundering laws after two years of wrangling. The final version is drawing fierce criticism for allowing loopholes for lawyers and other key advisers to the wealthy.
Both chambers of the Swiss parliament on Friday passed a revision to 24-year-old law to combat money laundering, according to the government's website. The approval is the culmination of two years of wrangling to tighten Switzerland's crime-fighting arsenal for illicit money, against the backdrop of several massive graft scandals like 1MDB and Venezuelan PDVSA.
The hardest-fought part of the two-year-long political process was whether to include related industries to wealth managers – chiefly lawyers, fiduciaries, trustees, and other consultants – in Switzerland's anti-money laundering law. Swiss lawmakers, which are heavily influenced by the finance lobby, opted not to do so in the revision passed on Friday.
Holey As Swiss Cheese
In typical Swiss fashion, the final version a compromise that almost no one is happy with: two non-profits immediately slammed it as an inadequate mini-revision with more holes than Swiss cheese, while Switzerland's banking lobby said it represents a start, but didn't go as far as the industry had wanted.
«Switzerland still has troubling loopholes and remains behind minimum standards internationally, because unlike other countries it doesn't subject services fraught with risk like lawyers and notaries to the same laws,» Transparency International said in a statement. Public Eye, another non-profit, said it expects the government to quickly propose a new, more effective redo.
Eyeing Next Review
The primary goal of the revision is to allow Switzerland to pass its next review by the FATF, or Financial Action Task Force (an international money-laundering monitoring group). The alpine nation scraped by in 2016 when the 1MDB scandal was exploding – and the wildly larger (in money terms) Venezuelan scandal indicates things haven’t changed much since then.
2020 wasn’t a great year for Switzerland’s efforts to rid itself of its reputation as a hotbed of money laundering: a Venezuelan graft scandal, PDVSA, detonated on several Swiss wealth managers, including Julius Baer and a top Swiss crimefighter exited with harsh words for the country’s inept fight against illicit money.
Crypto Vulnerability
The country's embrace of cryptocurrencies presents an additional vulnerability. On Wednesday, Switzerland's financial regulator denied Bitcoin Suisse, a crypto broker, a banking license over money-laundering concerns.
«As long as Switzerland tolerates such loopholes for money laundering, Swiss players will continue to be involved in major scandals,» Transparency's Swiss head Martin Hilti said. «Switzerland will, unfortunately – but rightly – continue to remain under international pressure.»
