Money laundering risks

The analyses in the Report are based on both quantitative and qualitative data obtained from public sources or provided by various federal and cantonal agencies and private sector actors. In terms of predicate offenses, fraud and embezzlement, corruption and affiliation with a criminal organization represent the main threats to the Swiss financial sector.

The overall assessment of money laundering risks revealed a medium risk for all areas subject to the Anti-Money Laundering Act (AMLA), although this risk varies from area to area. The greatest risk is identified in the universal banks. Thanks to the measures taken to combat money laundering, however, vulnerabilities are significantly reduced, so that despite the increased risk, it can be assumed that risk management in this area is adequate. The same applies to the following areas: Private banking, asset management, legal professions, fiduciary business, and money and value transfer services.

The analyses have shown that the risk for the insurance, casino and credit services sectors in Switzerland is low. The other areas analyzed (retail banks, securities trading, precious metals trading, money exchange transactions, payment services) are exposed to a medium risk. However, the measures in place to prevent and reduce the risk of money laundering and terrorist financing are commensurate with the risks identified.

Terrorist Financing

For terrorist financing, the analysis also revealed a limited risk, but one that could have a significant impact if it were to materialize. Moreover, the risk could increase if terrorist financing networks were to use alternative money transfer systems in Switzerland more systematically. This would increase both the exposure and the vulnerability of our country.

Currently, the financial intermediaries most exposed to terrorist financing are banks, service providers in the field of money and value transfer, and in the credit business, usually involving small amounts. The authorities cooperate closely in this area, both at the national and international levels. Continuing and strengthening this cooperation, particularly between intelligence agencies, further raising awareness among those potentially affected by terrorist financing, and using other available legal bases to combat terrorist financing are essential if the risk is to be contained.

Furthermore, six areas that are not directly subject to the AMLA were examined. The Interdepartmental Coordination Group on Combating Money Laundering and Terrorist Financing (KGGT) concludes that the current system adequately addresses the risks. Nevertheless, it proposes some measures for improvement.

The KGGT is of the opinion that the legal disposition for the areas subject to the AMLA, which was completed by the Federal Law of December 12, 2014 implementing the 2012 revised recommendations of the FATF, adequately addresses the current money laundering and terrorist financing risks overall. It also considers that the application of the tools provided by the legislation should still be improved at the operational level. For this reason, the KGGT recommends in its report eight measures to consolidate the current disposition. These include the promotion of the dialogue between the public and private sectors, the development and systematization of statistics, as well as specific recommendations for future analyses and concerning the investigations carried out in the sectors not subject to the MLA, namely the real estate and commodities sectors, foundations and bonded warehouses.

The national risk analysis is a continuous process. The report will have to be updated and supplemented with other reports and analyses so that the effectiveness of the Swiss system can be assessed and new hazards can be countered.