Switzerland admits being attractive for money laundering
22 Jun 2015 6:29 AM IST
The admission comes at a time when Switzerland has been facing immense pressure from India and many other nations to share details of Swiss bank customers 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 <g data-gr-id="46">decision making</g> <g data-gr-id="45">body</g>, 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.
The same is true for the following areas: private banking, asset management, legal professions, fiduciary business, and money and asset transfer services, as per the report.
The analyses also showed that there is a low threat for the areas of insurers, casinos and credit services in Switzerland.
The other areas analysed (retail banking, securities trading, trade in precious metals, currency exchange, and payment services) are exposed to a medium threat. The existing measures to prevent and reduce the risk of money laundering and terrorist financing are though proportionate to the risks identified in these areas.
The study further revealed a limited risk for terrorist financing, which could have a significant impact, however, if it occurred.
India slips to 61st place on Swiss money list, Pak at 73rd
India has moved down to 61st place in terms of foreigners' money in Swiss banks and it now accounts for a meagre 0.123 <g data-gr-id="70">per cent</g> of the total global wealth worth USD 1.6 trillion in Switzerland's banking system. While the UK and the US have retained their top two positions with the largest shares of the foreign clients' money with Swiss banks, Pakistan has inched up to 73rd place.
Interestingly, just two big banks – UBS and Credit Suisse – account for nearly two-third of the total money kept by foreigners in Swiss banks, while their share in case of Indians is even higher at about 82 <g data-gr-id="71">per cent</g>.
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