Switzerland unveils money laundering clampdown


Switzerland has proposed sweeping measures to clamp down on money laundering in an effort to shed the country’s reputation as a haven for ill-gotten gains.

Finance minister Karin Keller-Sutter unveiled reforms on Wednesday to increase transparency and close legal loopholes by requiring the ultimate “beneficial owners” of trusts and companies to be declared.

At present Switzerland is the only European country not to have such a national register of ownership.

Critics say the country’s existing regime has been abused by oligarchs and criminals around the world to disguise asset ownership using Swiss institutions and expertise.

“A robust system to protect against financial crime is essential to the reputation and lasting success of an internationally significant, secure and forward-looking financial centre,” said Keller-Sutter. “Money laundering harms the economy and jeopardises confidence in the financial system.”

Switzerland, which has a population of just 8.7mn, is the world’s number one centre for offshore wealth, with an estimated $2.4tn of foreign assets held by its banks.

The country’s financial community also plays an outsize role in helping to set up and tend to trusts and offshore structures in other jurisdictions.

Keller-Sutter said Switzerland had a good reputation internationally for upholding financial standards but acknowledged there were “gaps”.

Switzerland has come under particular international pressure in recent months to tighten up its financial controls as a result of Russia’s full-scale invasion of Ukraine.

Although the wealthy Alpine country has moved in lockstep with the EU in imposing sanctions on Russia, critics have accused Bern of inadequately policing compliance.

Switzerland’s long history as a favoured business and leisure haven for Russia’s elite continues to weigh on the country’s reputation among western peers.

In April, ambassadors in Bern from the G7 rebuked the Swiss government in a joint letter for turning a blind eye to many “loopholes” in Swiss law — and the role played by Swiss lawyers in exploiting them — which they said were being used to facilitate the evasion of sanctions.

The proposed reforms are the second time in three years that Switzerland has overhauled its laws against financial crime.

The new register of beneficial owners of all corporate entities and trusts set up in the country will not be accessible to the general public.

But it will be available for regulators, government and police as well as accredited banks and lawyers performing due diligence to access.

A second raft of measures will tighten obligations for Swiss lawyers, accountants and other service providers. This will require them to conduct due diligence on clients, keep records of the checks, and report suspected instances of money laundering to official authorities.

The proposals are still some way from becoming law. Under Switzerland’s consensus-based political system, a period of consultation with political parties, cantonal governments and civil groups, including the influential banking and lawyers’ lobbies, is required. This will take place over the next three months, before formal legislation is put before parliament next year.

Critics warn that the final measures may be significantly watered down. The proposals already recommend that compliance with the new rules is “self-regulated” for corporate service providers.

Recent high-profile court cases have shone an unflattering light on Swiss financial practices and undermined confidence in Bern’s assertions that it properly polices financial flows within its borders.

A Zurich court found four senior bankers guilty this year of having facilitated the laundering of tens of millions of dollars in money prosecutors said was directly linked to Russian president Vladimir Putin himself.

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