Switzerland admits to being 'attractive' for money laundering

  • PTI, Berne, Switzerland
  • Updated: Jun 21, 2015 13:45 IST

In a first major admission of being an "attractive location" for laundering of assets amassed illegally abroad, Switzerland has said it needs to further strengthen its internal systems for combating money laundering and terrorist financing.

The admission comes at a time when Switzerland has been facing immense pressure from India and many other nations to share details of its bank customers who are suspected to have used the famed secrecy walls of banking institutions in the European country to hide their illicit funds.

Without disclosing the names of the countries from where the financial crime proceeds could be coming in, a high-level government panel of the Alpine nation said that Switzerland is not immune to the financial crime and the banks are the most exposed financial entities to such risks.

While some Swiss banks have individually settled cases of alleged tax evasion by American citizens and by persons of other countries, this is the first time that Switzerland has admitted to the country being an "attractive" place for foreigners to keep their ill-gotten money.

The 'First National report on money laundering and terrorist financing risks' was discussed by Switzerland's apex decision making body, the Federal Council, in its last meeting held here this Friday.

Drawn up by a high-level inter-departmental working group, the report has analysed the most important areas subordinated to the Anti-Money Laundering Act as well as other selected areas that are not.

The analysis showed that "Switzerland is not immune to financial crime and is still an attractive location for laundering the proceeds of crime mostly committed abroad".

The panel observed that the current legislation takes appropriate account overall of the risks identified, but at the same time recommended "measures to strengthen the effectiveness of the Swiss system for combating money laundering and terrorist financing".

The report analysed both quantitative and qualitative data obtained from public sources or provided by various federal and cantonal offices and by private-sector entities, the Federal Council said.

In terms of predicate offences, the main threats for the Swiss financial sector are fraud, embezzlement, corruption and participation in a criminal organisation, it found.

"Although the overall assessment of the risks of money laundering resulted in a medium risk for all of the areas covered by the Anti-Money Laundering Act (AMLA), the level of risk differs for each area. The biggest threat has been identified in the area of universal banks."

"Nevertheless, the vulnerabilities are significantly reduced by the anti-money laundering measures so that appropriate risk management can be expected in this area despite the higher risk."

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