The Swiss Supervisory Board for the Due Diligence Agreement working with the Swiss Bankers Association has released a report highly critical...

The Swiss Supervisory Board for the Due Diligence Agreement working with the Swiss Bankers Association has released a report highly critical of due diligence among Swiss banks. The report reached condemnatory decisions in 71 out of 82 cases inspected. Most of the condemnations concerned breaches of the duty to verify the identity of a customer and to establish the identity of the beneficial owner of assets. The Swiss authorities are determined to crackdown on failure of banks to carry out the necessary due diligence and they face fines of up to SFr10 million ($7.7 million). During the period under review (1 July 2001 to 30 April 2005), an increase in the level of fines was recorded. Fifty-eight banks were fined, compared with 31 in the previous period. The highest fine imposed during the period under review was SFr750,000. The total sum of fines imposed amounted to about SFr7 million. The agreement on the Swiss banks' code of conduct with regard to the exercise of due diligence (Due Diligence Agreement) is a multilateral agreement between the Swiss Bankers Association and banks domiciled in Switzerland. The original agreement dates from 1 July 1977 and it has been revised five times since then. The agreement currently in force came into effect on 1 July 2003. Compliance with the agreement is monitored by a Supervisory Board. This Board consists of five independent people who are elected by the SBA for a term of five years and is currently chaired by Jean-François Egli, a former president of the Federal Supreme Court.