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Anti-money laundering rules under scrutiny

Switzerland used to have a reputation as safe haven for criminal money.


The independent Financial Action Task Force (FATF) has welcomed Switzerland's efforts to combat money laundering.

In its latest review the FATF acknowledged Switzerland's cooperation, but criticised legal loopholes and the slow implementation of international recommendations.

The third report of the Paris-based organisation gives Switzerland generally good marks, according to Alex Karrer, who heads the Swiss delegation at the FATF.

He said the experts praised Switzerland for its cooperation on an international level in the fight against money laundering, and for the way it pursues criminal offenders.

But Switzerland came in for criticism over perceived loopholes, because Swiss law does not consider smuggling, insider dealings and human trafficking as crimes in the context of money laundering.

Karrer added that the inter-governmental body pointed out that transparency rules for so-called bearer shares were not sufficient and that the country was too slow in implementing recommendations on cross-border cash payments.

Legal amendment

Karrer said the Swiss cabinet had addressed most of the points in a proposed amendment to the law against money laundering earlier this year.

However, the banking industry and centre-right parties have slammed the plans to tighten the law as too bureaucratic.

The head of the Swiss delegation also dismissed criticism over the application of the "know-your customer" rule and the perceived inefficiency of the reporting system of Swiss banks.

Karrer stressed that Switzerland welcomed the FATF report, but did not elaborate on the possible impact on the proposed legal amendments.

He added that the international experts had been more strict and detailed in their latest assessment.


In a similar vein, the Swiss banking industry welcomed the report which is addressed to the Swiss government.

"Swiss banks are pleased that the FATF acknowledges the fundamental soundness of Switzerland's anti-money laundering arsenal and the pioneering work Switzerland has carried out in this area," Swiss Bankers Association spokesman James Nason told swissinfo.

"While we are indeed grateful to the FATF for suggesting areas for potential improvement, we believe many of the critical points made in the report are a logical consequence of the rigidly formalistic methodology used for the assessment," he added.


In a related development, the Swiss banking regulator says banks and securities dealers are adequately implementing the latest anti-money laundering rules, that came into effect in 2003.

In a statement published on Wednesday the Swiss Federal Banking Commission found that there were still some deficiencies at some institutions, notably too restrictive risk definitions and inadequate training concepts.

But they affected only 0.1 per cent of the business relationships, the commission said.

A total of 405 banks, 450 Raiffeisen banks and 69 securities dealers and their more than 26 million business relationships were covered by the implementation audit.

swissinfo with agencies

Key facts

The FATF is a Paris-based organisation responsible for coordinating global efforts to stamp out money laundering.
It currently has 33 members. These consist of 31 countries and two international organisations – the EU and the Gulf Co-operation Council.
Switzerland has long suffered from a reputation for being a safe haven for dirty money.
Tough new rules, imposed by the Swiss Federal Banking Commission, took effect in July 2003.

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