The fight against money laundering
Switzerland has strict regulation in place to prevent money laundering and terrorist financing. It implements the international standards of the Financial Action Task Force (FATF), an international body of experts whose Secretariat is housed at the OECD. The FATF defines standards relating to money laundering that are applicable worldwide.
Switzerland was one of the first countries to introduce measures against money laundering. With the Agreement on the Swiss banks’ code of conduct with regard to the exercise of due diligence (CDB) introduced in 1977, Switzerland became a pioneer in identifying contracting parties and determining the identity of beneficial owners. The CDB is one of the main pillars in the fight against money laundering. It is revised periodically and exists in its current version as CDB 20.
Switzerland’s mechanisms for combating money laundering have expanded steadily ever since and in addition to the provisions contained in the Swiss Criminal Code (Art. 305 bis and 305 ter SCC), today also comprise the Federal Act on Combating Money Laundering and Terrorist Financing (AMLA) and a corresponding ordinance of the Swiss Financial Market Supervisory Authority (FINMA) on the prevention of money laundering and terrorist financing (FINMA Anti-Money Laundering Ordinance, AMLO-FINMA), as well as the CDB mentioned previously. Through these measures, the FATF’s recommendations are met to the greatest possible extent.
Self-regulation of the banks
The CDB, which is enacted by the SBA as self-regulation in the form of a code of conduct and is generally revised and updated every five years, has defined the duties of the banks for identifying the contracting party and determining the identity of the controlling person or the beneficial owner since 1977. Further to this, it prohibits active assistance in the flight of capital and tax evasion.
Statutory bank auditors are mandated by the banks and FINMA to monitor the banks’ compliance with the agreement. Special investigators and a CDB supervisory board assess breaches of the agreement. In the event of a breach of the code of conduct, a fine of up to CHF 10 million can be imposed on the bank in question, which is then used for non-profit purposes by the SBA.
The FATF, which was founded at a G7 summit in 1989, and is associated with the OECD and based in Paris, has 35 member states including Switzerland, and has developed 40 recommendations relating to combating money laundering and terrorist financing. Although these recommendations are not legally binding, they are recognised as such at the international level and are transposed accordingly into the national laws of the member states. Following the terrorist attacks on 11 September 2001, the FATF in the fall of 2001 issued an additional 9 so-called special recommendations addressing a number of specific issues with the aim of combating not only money laundering as was the case at the outset, but also terrorist financing.
The FATF conducts so-called mutual examinations of the various member states in order to assess the implementation of its recommendations. Following the mutual examinations, the FATF publishes the mutual evaluation reports on its website.
In 2012, the FATF revised its 40 recommendations, which in turn required a revision of the Swiss legal money laundering mechanisms. To this end, Swiss parliament adopted a law for implementing the revisions in December 2014, which came into effect on 1 January 2016.
The changes introduced include in particular:
- the duty to establish the identity of a controlling person for operating legal entities, partnerships, foundations and trusts;
- the duty to establish a natural person as beneficial owner;
- the duty of companies to keep a register that lists its shareholders;
- the introduction of qualified tax offences as a predicate offence to money laundering;
- the broadening of the definition of “PEP” (politically exposed person) to include domestic PEPs and PEPs belonging to intergovernmental organisations;
- additional due diligence duties for salespeople in the event of cash payments in excess of CHF 100,000.00.
Switzerland’s fourth FATF country evaluation was conducted in the spring of 2016, and included an assessment of the implementation of the recommendations that were revised in 2012. In December 2016, the FATF published the fourth mutual evaluation report, which states that Switzerland’s overall performance was good and its results were above average in comparison to the other countries that had already undergone evaluation. The FATF recognises the quality of the Swiss mechanisms for combating money laundering and terrorist financing.
In terms of its legal mechanisms, Switzerland is categorised as “compliant” or “largely compliant” with 31 of the 40 recommendations. In the assessment of effectiveness, which is a central element of the FATF country evaluation, Switzerland scored well in seven of the eleven categories examined. Further to this, the FATF did not identify any significant shortcomings in the mechanisms.
Präsident, President, Mentha Avocats, Genève
Michel Y. Dérobert
Mitglied, ehem. Direktor der Vereinigung Schweizerischer Privatbanken (VSPB), Genthod
Mitglied, Rechtsanwältin, Centro Studi Villa Negroni, Vezia
Mitglied, Fürsprecher, LL.M., ehem. Managing Director und Senior Advisor General Counsel Division, Credit Suisse AG, Muri
Mitglied, Rechtsanwalt, ehem. General Counsel ZKB (1992-2016), Richter Handelsgericht ZH, Au
Mitglied, Rechtsanwalt, LL.M., Prof. für Verwaltungsrecht an der Juristischen Fakultät der Universität Freiburg, Givisiez
Sekretär, Rechtsanwalt, Friedli & Schnidrig Rechtsanwälte, Bern
stv. Sekretär, Rechtsanwalt, Des Gouttes & Associés, Genève
Untersuchungsbeauftragter, Avvocato, CSNLAW, Lugano
Untersuchungsbeauftragter, Rechtsanwalt, CMS von Erlach Poncet AG, Zürich
Didier de Montmollin
Untersuchungsbeauftragter, Avocat, DGE avocats, DGE Avocats, Genève
Untersuchungsbeauftragter, Rechtsanwalt, Lüscher Bischoff Rechtsanwälte, Zürich
Untersuchungsbeauftragter, Massard & Rossi Avocats au barreau, Neuchâtel
Untersuchungsbeauftragter, Rechtsanwalt, Wartmann Merker Rechtsanwälte, Zürich
Links & Documents
Agreement on the Swiss banks’ code of conduct with regard to the exercise of due diligence (CDB 20) (2020)
Commentary on the Agreement on the Swiss banks’ code of conduct with regard to the exercise of due diligence (CDB 20)
Leading Cases der Aufsichtskommission VSB 2. Halbjahr 2020 (1. Juli bis 31. Dezember 2020)