Leading banks establish anti-money laundering principles

The late Nigerian dictator, Sani Abacha, was a major client of Swiss banks swissinfo.ch

A group of the world's largest banks, including Switzerland's UBS and Credit Suisse groups, agreed on Monday to a set of global anti-money laundering guidelines for international private banks.

The new guidelines were announced in Zurich on Monday by 11 banks and by Transparency International (TI), the global anti-corruption organisation.

The package has been seen partly as a bid to counter allegations that the banks are not doing enough to prevent dirty money entering the global financial system.

The guidelines are intended to help banks secure the accurate identity of individuals opening private banking accounts.

The group and TI say that from time to time individuals seek to secure anonymity for themselves and use third parties to represent them on opening accounts.

The guidelines state clearly: “Beneficial ownership must be established for all accounts.”

The banks and TI said they anticipated the principles would be widely accepted by a growing number of financial institutions.

An important working session to formulate the guidelines was held in Wolfsberg, Switzerland, and the new guidelines may become known as the “Wolfsberg Anti-Money Laundering Principles”.

The chairman of Transparency International, Peter Eigen, said that TI had served as a catalyst for the leading banks to work together to try to make it harder for corrupt people to deposit their ill-gotten gains in the world’s banking system.

“We have provided expert advice throughout a process that now commits the senior managements of the participating banks to the enforcement of the principles that are being published,” Eigen said.

John Cusack, head of legal compliance at UBS, Switzerland’s largest bank, told swissinfo the Wolfsberg Principles set a global standard for private banking: “These are global standards that we apply. We operate in nearly every country in the world…and what we now commit to, is to apply these principles in every place we do business, with every employee and with every client. This is fundamental,” Cusack said.

The principles deal with various aspects of “know your customer” policies that pertain to relationships between wealthy individuals and the private banking departments of financial institutions.

They also deal with the identification and follow-up of unusual or suspicious activities.

Mark Pieth, a Swiss expert on money laundering who also chairs the Organisation for Economic Cooperation and Development’s Working Group on Bribery, advised both the banks and TI during their talks.

He said that this was the first time that a broad range of banks had agreed to come together to fine-tune the “know your customer” rules. He said the initiative was “highly significant” in the OECD’s work against corruption.

“It helps to make it far more difficult to create slush funds for bribery or to hide corruption money in the regulated banking sector, since the level of awareness is raised substantially, and in an internationally standardised way,” he said.

Experts estimate SFr1,050 billion ($590 billion) is laundered annually. The most recent high profile case in Switzerland involved SFr1.148 billion) deposited by the regime of Nigeria’s late dictator Sani Abacha. Swiss authorities have frozen these accounts.

The Independent Network Monitoring the Swiss Financial System, which has long campaigned to tighten regulations, welcomed the initiative. However, it said in a statement that the measures relied on self-regulation for their application and that there were no penalites for infringements.

The banks that have agreed to the new code are ABN AMRO Bank, Barclays Bank, Banco Santander Central Hispano, The Chase Manhatan Private Bank, Citibank, Credit Suisse Group, Deutsche Bank, HSBC, J.P. Morgan, Société Générale and UBS.

swissinfo with agencies