Switzerland Strengthens Its Defences Against Money Laundering

Switzerland Strengthens Its Defences Against Money Laundering

by October 16, 2023

The Swiss financial centre is one of the world’s leading and most diverse, employing more than 200,000 people.

With its financial sector accounting for a substantial 9.7% of the Swiss gross domestic product (GDP), it stands as a vital pillar of the national economy. Furthermore, Switzerland’s prominence extends globally, as it leads in cross-border asset management, overseeing approximately a quarter of the world’s cross-border assets. Swiss banks have a local presence worldwide, including in Asia, for example in Singapore, Dubai, Hongkong, Shanghai.

The Swiss authorities and the industry hold regular financial dialogues with Asian partner countries and have also been present at the Singapore Fintech Festival for years.

With such an important financial centre, Switzerland has an interest not only in maintaining the trust of its investors, but also in preventing abuse. It is therefore committed to combating money laundering. Money laundering is not only a source of reputational damage, but also a source of funding for illegal or perilous activities such as drug trafficking or terrorism. This fight must be waged at both national and international levels.

Continuous improvement protects the financial centre

The Swiss government continuously strives to raise the bar in this endeavour. Swiss Finance Minister Karin Keller-Sutter, while unveiling the latest proposal in August, remarked,

Swiss Finance Minister Karin Keller-Sutter

Swiss Finance Minister Karin Keller-Sutter

“The Swiss anti-money laundering framework is considered good overall by international bodies, but there are gaps.”

Therefore, the current system was analysed and gaps were identified. These gaps now need to be closed.

Lessons from other countries have helped to develop the current proposal – without upsetting customers and potential investors. This has resulted in a draft law that is intended to introduce a number of measures that will provide even more effective protection for the financial centre.

New measures to combat money laundering

One of the proposed new measures is a national register of beneficial owners. This would bring more transparency to corporate structures. In particular, law enforcement authorities would be able to determine more quickly and reliably who is behind a legal structure. The registration burden for companies should be kept to a minimum.

In addition, the Swiss government is proposing to extend the duty of due diligence to certain legal professions. These include lawyers, notaries and accountants. In the case of activities with an increased risk of money laundering, they must ensure that they know the client, the beneficial owner, the purpose and the nature of the transaction. In this context, the establishment of legal entities or trusts and real estate transactions are considered to be high-risk activities. Attorney-client privilege will not be infringed by the proposed changes.

On top of that, the Swiss government is proposing further measures in the fight against money laundering. For example, it wants to lower the threshold for cash payments in precious metals trading from CHF 100,000 to CHF 15,000. In real estate trading, all cash payments will be subject to due diligence.

These measures are by no means novel; they have already proven successful in other jurisdictions and garnered positive feedback. Switzerland’s proposal, therefore, stands as a contribution to the international campaign against money laundering, further fortifying its financial centre and burnishing its global reputation.


Featured image credit: Edited from freepik