More caution urged in bank dealings with blacklisted countries

The Swiss federal banking commission has urged financial institutions to be more careful in their dealings with the 15 countries on a blacklist published by the Organisation for Economic Co-operation and Development (OECD).

In a letter sent on Tuesday, the commission reminded financial institutions of their duties before accepting deposits.

The statement comes two months after the Swiss Money Laundering Control Authority issued its own written warning of the risks involved in dealing with certain countries.

The countries concerned are those listed at the end of June by the OECD’s Financial Action Task Force on Money Laundering (FATF), as uncooperative in the fight against money laundering.

They include several Pacific and Caribbean island states, Russia, Lebanon, Israel, the Philippines, and also Liechtenstein, a frequent client of Swiss banks.

The neighbouring principality is also linked to Switzerland through a currency union, and the two countries share an open border.

The federal banking commission highlighted three areas in particular where Swiss financial institutions should exercise greater care. Firstly when it is unclear who the beneficiary of an account is, and where there is doubt about the origin of the money or the legality of the transaction.

Secondly, the commission recalled the banks’ obligation to clarify the history of financial transactions, and thirdly it pointed out their duty to monitor the activities of subsidiaries or branches established in countries featured on the list.

The commission is keen to avert any more high profile scandals such as those which have further tarnished Switzerland’s image as a financial centre over the past year.

The most high-profile case was the discovery of more than SFr1 billion in funds linked to the former Nigerian military ruler, Sani Abacha.

Meanwhile, the finance minister, Kaspar Villiger, has told parliament that European Union and OECD pressure against Swiss banking secrecy was not only motivated by high morals. He said it also had a lot to do with competition among financial centres.

He described the international pressure as a “campaign” against banking secrecy, and reiterated that Switzerland neither wanted or needed dirty money.

Villiger also repeated his opposition to EU proposals for banks to declare the assets of non-resident EU citizens. He said a withholding tax on interest (currently 35 per cent in Switzerland) was a more efficient way of fighting tax evasion.

swissinfo with agencies