Switzerland Falls Behind in the Fight Against Money Laundering

The Parliament of Switzerland has voted against the requirement of performing due diligence on lawyers and financial advisors against money laundering activities. This decision is taken under the revised anti-money laundering regulations. The experts believe has this verdict has weakened the text of any substance.

The revision of the Anti-money laundering was supposed to bring the country in league with the international standards of AML regulation. However, the Parliament, after a lengthy debate in the chambers, ended up agreeing on the changes that are clearly not enough for Switzerland’s part in the fight against money laundering.

Financial Action Task Force (FATF), the global watchdog for financial regulations, have already agreed, back in 2005, that lawyers, as well as financial advisors, must be included in the Swiss law to fight money laundering crimes. However, it has been sixteen years and the lawmakers of the country are still refusing to follow these necessary recommendations by FATF despite the government’s proposal.

The modification in the law has brought some important changes like financial intermediaries are mandated to identify all their clients and verify their identities. They must also provide a report that proves that they have properly checked their clients’ background and purpose and which type of services they have been provided. Periodic checks will be carried out on the details given by the financial negotiators. Some experts still believe that these modifications made by the Parliament have not brought major changes. These modifications have only endorsed the already existing measures.

Upon asking if the neglection of due diligence of lawyers and financial advisors in the anti-money laundering law negatively affects the regulations, Katia Villard, a lecturer at the Center for Banking and Financial Law at the University of Geneva, said, “This is indeed a loophole, which was actually addressed at the international level a long time ago. It was identified as a risk area for money laundering. There is no reason why it shouldn’t be subject to legislation.

She also said, “Lawmakers also refused to tighten up requirements for dealers of precious metals. The government’s proposal was to reduce the maximum amount that these dealers can accept in cash payments to CHF15,000 ($16,200), which corresponds to the ceiling set by the European Union.”