Portfolio managers get new tool to check dubious accounts

Nematrax will help portfolio managers identify accounts used for money laundering Keystone Archive

A Geneva company has developed a new computer programme that will help portfolio managers comply with the Swiss laws on combating money laundering, which requires them to report any suspicious transactions.

“Portfolio managers came to us and told us that the new regulations were causing them a lot of problems,” says Raoul Jobin, CEO of Webcom, the start-up behind the new Nematrax software.

“This gives them a methodology they can follow,” he explained to swissinfo.

Under the federal legislation, which came into force in April 1998, all financial intermediaries must provide precise information on the funds they handle. If they suspect assets have been involved in money laundering or are being used by a criminal organisation, they must freeze the account and report it to the authorities.

The law also obliges them to undertake “organisational measures” to prevent money laundering, which is where Nematrax comes in. Private banks, which were already subject to similar regulations, were prepared for the new legislation, but it created a major headache for independent portfolio managers.

“Nematrax is specifically aimed at them. And it’s designed to cope with further changes in legislation,” Jobin says.

Initially, the new programme is being targeted at the 1,500 fund managers in French-speaking Switzerland. But the software allows for a German translation, and ultimately it will be marketed at the 3,500 such intermediaries throughout Switzerland.

The programme helps portfolio managers to investigate the origins of the money they are expected to handle, by analysing its “traceability”.

“There is a part of the software that can automatically control the relations between the accounts. So if someone is a stockholder in a company, which happens to be owned by a relative, the software will automatically alert you that there may be a problem,” Jobin explains.

Nematrax costs between SFr12,500 and SFr37,500, which could be money well spent if portfolio managers avoid incurring the wrath of the authorities.

Switzerland may be keen to rid itself of its reputation as a haven for dubious money, but it is also proud that it remains a land of banking secrecy. Jobin boasts that Nematrax is a very secure system, that allows a client’s financial details to remain “absolutely confidential”.

“All of the data are encrypted with a very sophisticated algorithm and stored in two removable hard disks, which can be placed in a safe,” he says. Activation of Nematrax requires a personal identification, such as a USB key or a fingerprint.

Some may have taken advantage of this guarantee of secrecy in the past to launder their ill-gotten gains. Others have different motives for wanting details of their accounts kept confidential: “A customer may have a girlfriend with expensive tastes and he doesn’t want his wife finding out. A portfolio manager is probably unwilling to ask these kinds of questions.”

Nematrax is perhaps a way for both to avoid embarrassment.

by Roy Probert