Blatant loopholes for money laundering
In a report just published, Transparency International Switzerland shows that there are significant gaps in Switzerland's money laundering legislation. There is an urgent need for action, writes the organization. The current scope of the Anti-Money Laundering Act is insufficient and must in future also cover such sensitive shadow transactions as those carried out by lawyers, notaries, real estate agents and dealers in art and luxury goods.
Swiss money laundering legislation still lags behind international minimum standards in important areas. The Money Laundering Act is limited to financial intermediary activities, i.e. those in which, for example, a lawyer or asset manager has direct access to his client's assets. At the latest, however, the data leaks and the money laundering cases uncovered by law enforcement agencies and the media in recent years showed that the issue was taking up an increasingly broad spectrum of services and was not limited to financial intermediation. Rather, they would use increasingly complex legal constructs to conceal the illegal origin of their funds. In the process, a real shadow economy has emerged in which Swiss players are prominently involved, complains the Transparency International Switzerland. Switzerland is therefore - unfortunately, but rightly - once again under international pressure. In its recent country evaluation, the Financial Action Task Force (FATF) criticized Switzerland on the points mentioned. The OECD recently did the same in its country evaluation of Switzerland.
Where specifically are gaps?
The Report by Transparency International Switzerland shows where there are gaps in the Swiss anti-money laundering system and how these gaps can be closed. According to Transparency International Switzerland, two areas are in the foreground:
- The scope of the Anti-Money Laundering Act should finally be adapted to the internationally applicable standard. Thus, non-financial intermediary activities on behalf of clients should now also be included - such as, in particular, the establishment and board activities of legal entities and trusts, financial and investment advice, the purchase and sale of real estate, and trading in art and luxury goods.
- Even with the requested extension of the Anti-Money Laundering Act, the professional secrecy of lawyers and notaries is preserved. However, this must no longer provide protection for services that enable or significantly facilitate money laundering by a client. Such abuses of professional secrecy must be better countered. Lawyers and notaries should therefore also comply with the legal duties of care to prevent money laundering and in certain constellations should have to report a concrete suspicion of money laundering to the authorities.
Martin Hilti, Managing Director of Transparency International Switzerland, explains: "It must not be allowed that money laundering continues to be made possible through services provided by Swiss actors. Such transactions in the semi-dark not only damage the reputation of our country, but also the Swiss financial center and the entire national economy; moreover, they undermine the rule of law and all too often also the economic development of the countries of origin of such illegal funds. The existing legislative loopholes must therefore be quickly and effectively eliminated."
