Switzerland is not equipped to combat money laundering

Switzerland is not equipped to combat money laundering


that Audit It was revealed by the Swiss financial authorities that the country is currently ill-equipped to properly investigate and deter cases of money laundering across multiple economic sectors.

Credit Suisse flagsAn audit by Swiss financial authorities revealed that the country is currently ill-equipped to properly investigate and deter money laundering. (picture: Sue Sharman AndersonAnd the flickrAnd the license)The report by the Swiss Federal Audit Office (SFAO) assessed the country’s success in combating white-collar crime, specifically money laundering.

The audits conducted by the Financial and Global Affairs Office (SFAO), dated 2012-2015, “revealed weaknesses and, therefore, financial and reputational risks to the Swiss authorities”, Financial Agency He said In a summary report.

“In many cases, these improvements also require changes to the legal framework, for which the political authorities are responsible,” one of the Public Prosecutions statement read.

One of the weaknesses highlighted was the country’s real estate sector, specifically the land registry, which was noted to lack proper oversight and is therefore not protected against money laundering.

Despite the fact that in its report the SFAO recommended further development within the scope of the mission of the Federal Office of Land Registry and Land Law (EGBA) in Switzerland: to ensure that land ownership laws in the country are properly enforced, the office said that there is no legal scope within which to mitigate the laundering Funds through the land registry system.

EGBA refused to expand on this point when asked by OCCRP.

Real estate is a common good that criminals and corrupt people pursue as they seek to launder their ill-gotten gains. Although there are federal laws, by and large, by restriction Foreign ownership of Swiss land – outside of land purchased for commercial purposes – it is up to the state authorities to support it.

The SFAO report found that this is likely to leave the supervisory and financial authority in Switzerland fragmented when it comes to monitoring money laundering threats through the country’s real estate sector.

Another sector criticized in the SFAO review is commodities, specifically the precious metals sector such as gold and silver.

In 2018, nearly 2,300 tons of gold worth 63 billion Swiss francs ($64.4 billion) passed through Swiss customs inspections, as well as 18 billion Swiss francs ($18.4 billion) worth of watches and jewelry made from metal, the report said. precious.

However, the country’s financial authorities have indicated that there is significant room for improvement in terms of monitoring and monitoring of precious metals.

Until early 2019, for example, the supervisory authorities of the authorities were limited to summary management checks at precious metal smelters.

However, under the country’s federal Anti-Money Laundering and Terrorist Financing Act (AMLA), authorities are left blind when it comes to purchasing thawed goods. The privilege of this information among financial intermediaries in the precious metals sector.

According to the report, authorities are limited to “examining trade in gold bullion that has already been smelted between commercial auditors and financial institutions.”

Not only that, but the report stated that the poor quality of the country’s tariff data hampers the precious metals control offices in Switzerland in their efforts to properly classify customs declarations over which they have authority, thus reducing their overall effectiveness.

SFAO officials did not comment when OCCRP was asked to clarify to what extent they would like to expand the supervisory powers of the country’s precious metals authorities.

The speed with which investigations are conducted is addressed in the SFAO report as an important factor in the fight against economic crime. This is particularly important for Switzerland, with both Zurich and Geneva ranked among the world’s largest financial centers.

On this point, the Financial Office criticized “slowness and inefficiency in criminal proceedings in money laundering” and in investigations against white-collar crime in general.

One explanation was that the country’s financial authorities and courts were simply overworked; The report noted that a single court “must excrete large amounts of sealed computer data (hard drives, USB sticks, phone taps, etc.)” and proceedings “can last “up to an average of 400 days”, at which point it can play The statute of limitations for the country.

With regard to a judgment, the office indicated that under the current legislation, the maximum fine is five million Swiss francs ($5.1 million). This substandard deterrent has been lifted in the past by Swiss and US authorities, to no avail.

The Swiss Federal Office of Justice (FOJ) did not respond to comment when asked by the OCCRP how the country’s anti-money laundering legislation could be strengthened to combat financial crime more effectively.

Although state authorities in Switzerland investigate economic crime cases independently of each other, the state has a federal analysis office where financial intermediaries report suspicious activity.

The Money Laundering Reporting Office (MROS), based in Fedpol, the country’s federal police office, serves as a central hub and clearinghouse for information related to money laundering and all other forms of criminal financing.

In 2020, MROS received more than 5,000 reports totaling about 15.5 billion Swiss francs ($15.8 billion) being investigated for criminal activity, 90 percent of which came from banks, according to an SFAO report.

However, information appears to only flow in one direction in this system. The audit noted that “MROS does not know what happens to the files it sends to law enforcement agencies,” hindering its ability to provide further assistance to authorities as a particular investigation develops.

This obstacle is not limited to the country’s central money laundering office only. Money laundering through the Swiss banking system has special safeguards that we have not seen in other parts of the Western world.

As reported in a Suisse Secrets investigation by OCCRP with its partners in February, Section 47 of the Swiss Banking Act puts journalists in the country at risk of prosecution for simply possessing, let alone publishing, private bank data. This acts as a shield for criminals and the corrupt as it mitigates the exposure risks they may face by investigating their illegal financial activities.

In short, Swiss legislation on banking privacy leaves the entire sector vulnerable to money laundering activity and, as the Office of Finance and Global Affairs notes, the lack of proper communication between law enforcement agencies tasked with investigating financial crimes.

In keeping with the country’s penchant for privacy, its financial authorities did not comment when asked by OCCRP how to properly address these problems, even as the country realized it desperately needed to take a tougher stance on money laundering.





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