Compliance

Swiss Regulator Says Lack of Resources Stifles Anti Money Laundering Laws

A staff reporter, 23 February 2001

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The Swiss department of finance has admitted that a lack of resources in the supervision of transactions made by financial intermediaries fo...

The Swiss department of finance has admitted that a lack of resources in the supervision of transactions made by financial intermediaries following allegations made in a French parliamentary report on money laundering in the Alps federation, which was published on 20 February. French claims that Switzerland’s anti-money laundering laws are ineffective have been rejected by the department.

Switzerland’s anti-money laundering law became effective in 1998 and covers banks as well as financial intermediaries. The enforcement of the law is the task of the Kontrollstelle für die Bekämpfung der Geldwäscherei , a unit of the department of finance. “Like the implementation of all new laws, putting the anti-money laundering law into practice has been afflicted by certain difficulties. It has become evident, that the Kontrollstelle has not enough staff yet,” said Giovanni Colombo, head of international financial matters of the department of finance. He added that the situation has been addressed. The unit has eight staff at present, including five lawyers. It plans to advertise three additional full-time lawyers positions in mid March.

Arnaud Montebourg, the author of the report, called on the Swiss government to increase transparency of trusts and recommended to make registration with the Kontrollstelle mandatory for all intermediaries. Swiss law gives intermediaries the choice to either register with one of the 12 self regulatory organisations in Switzerland or directly with the Kontrollstelle. Some 90 per cent of the 5,500 registered intermediaries in the country have chosen to register with a SRO. The dominance of self regulating organisations has made the federal regulator powerless, said Montebourg according to a report in French paper La Tribune. Other demands made in the French report include the lifting of Switzerland’s banking secrecy laws and a lowering of reporting thresholds. Here, the report proposed to change current legislation to the effect that no client relationship needs to be established for a bank or intermediary to report suspicious transactions or individuals.

The president of the report committee, Vincent Peillon, referred to Switzerland as the state “that the criminals in the world still choose to shelter their assets today,” according to La Tribune. In response, the Swiss government brushes the report away as unfounded and insubstantial. According to the finance department, it is based on interpretation of informal talks with members of the federal administration, local government officials and some representatives of the private sector. “The French delegation visited Switzerland twice between September 1999 and the end of last year. This report is not based on a comprehensive, in-depth analysis of the Swiss anti-money laundering regime,” commented Colombo.

The parliamentary task force previously criticised Liechtenstein and Monaco’s efforts to fight money laundering. It is widely expected that the next jurisdictions on Montebourg’s agenda are the UK, the Channel Islands and Gibraltar.

The parliamentary task force has caused raised eyebrows in banking circles at home after Montebourg accused Bank of France governor Jean-Claude Trichet at a press conference of having turned a blind eye to alleged money laundering transactions at a Lyon subsidiary of Swiss bank Banque Cantonale Geneve. Trichet rejected the accusations and called Montebourg’s move “surprising” because the central bank had initiated the appropriate enforcement procedure and informed the task force in detail several months ago.

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