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Casinos play by the rules

Concerns about the potential for money laundering delayed the government’s decision to award new casino licences Keystone

Casino operators and federal authorities insist Switzerland's new gaming houses are secure against money laundering and organised crime.

This content was published on July 10, 2002 - 09:00

The granting of licences to seven new grand casinos had raised concerns that they might be targeted by criminals. But the Swiss government says it has introduced a system of checks to ensure the new casinos operate in a legal and independent manner.

"If you know who owns a casino and where the money that has been invested comes from, then you can make sure as far as possible that no criminal interest is directly controlling the casino," Yves Rossier, director of the Federal Gaming Commission, told swissinfo.

Worries over organised crime and the potential for money laundering delayed the government's decision to award licences to seven new grand casinos.

But in recent weeks and after fulfilling a series of strict guidelines, Lucerne, Baden and now Bern, have taken the final step in a process that began almost ten years ago. Swiss voters approved making gambling houses legal in a national referendum in 1993.

Operator checks

The government gave the commission the responsibility for inspecting all the applicants for the new licences. This includes investigating shareholders' backgrounds and documenting every detail of a company's management team, its contracts and suppliers.

"It was a long and tedious process," Paul Herzfeld of Casinos Austria International told swissinfo. "But we had to follow the regulations if we wanted to be successful in our application."

Casinos Austria International has invested SFr45 million in three Swiss casinos. It has a 15 per cent stake in Bern, 45 per cent in Lucerne and 30 per cent in the casino in St Gallen, which is due to open at the end of next year.

Rossier says there will be no let-up in the surveillance of the new casinos for the duration of the current 20-year licence. Every time there is a change in shareholders, the original vetting process will be repeated.

"The point is not who the formal shareholder is," says Rossier. "but who is behind the new shareholder.

"If the answer is not sufficiently clear, then the gaming licence could be suspended, or if there are any doubts [about the shareholder] it could be revoked."

As an extra precaution against money laundering, the commission keeps a monthly check on how much money the casinos are earning.

"It's another security check," says Rossier. "It would be extremely difficult for a casino to pretend to pass dirty money through its books by pretending to be making more money than we know to be the case."

Customers under scrutiny

It is not only the operator that comes under the scrutiny of the gaming commission, but also the gambler. Once again the casino has to meet a number of regulatory obligations to ensure that customers do not attempt to clean "dirty money".

Stefan Harra, the director of Bern's casino, says the rules for documenting cash transactions are very clear.

"You can spend as much as you like, but if you want to change any amount above SFr15,000 from chips to cash, you have to sign that you are the owner of the money."

The casino keeps a copy of both the customer's passport details and the transaction on file. Anyone refusing to sign will be asked to leave the casino.

Rossier says there are a number of checks within each casino to ensure the customer does not try to launder money.

"The casinos are expected to work by the 'know-your-customer' principle and the registration threshold [of SFr15,000] means that a trace of the money is left behind."

One law - several authorities

The gaming commission is responsible for making sure that casinos adhere to the regulations. But when a casino suspects a customer of illegal transactions it is required to submit a report to the Money Laundering Reporting Office (MROS).

The money is frozen for five days, during which time the MROS, which is part of the Federal Police Office, carries out further investigations. Investigators then have to decide whether to drop the case or pass it on to the appropriate federal or cantonal prosecuting authority.

A similar pattern exists in all the other financial sectors in Switzerland. The Swiss Federal Banking Commission, the Federal Office of Private Insurance and the Money Laundering Control Authority are all supervisory bodies. They ensure that the financial organisations for which they are responsible abide by the regulations,

Dina Balleyguier, head of the Money Laundering Control Authority, the body that oversees asset managers, bureaux de change, and trust funds, says the division of between investigation and supervision is a vital one.

But she says having several authorities responsible for different sectors of the financial sector can appear confusing from the outside.

"The difference between the MROS and the other offices is important, because it is carrying out true investigative work for which we do not have the know-how," explains Balleyguier.

Gaming laws in Switzerland and the MROS have established a series of controls that Paul Herzfeld of Casinos Austria International says minimise the chances of illegal activities by both operators and customers in the new grand casinos.

"Switzerland looked at the regulations in other countries and picked the best - putting together a system that exercised very strict controls and a thorough examination of casino licence applicants," says Herzfeld.

by Jonathan Summerton and Fabio Mariani

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