FATF: Switzerland fares well in combating money laundering and terrorist financing
Bern, 07.12.2016 - On 7 December 2016, the Financial Action Task Force (FATF) published the fourth mutual evaluation report on Switzerland. Overall Switzerland receives good marks and achieves an above-average result compared to those countries already reviewed. The FATF acknowledges the quality of the Swiss system for combating money laundering and terrorist financing. In its report, it made a series of recommendations to improve Swiss legislation and its implementation.
The last complete mutual evaluation report on Switzerland was published in 2005. The new report reflects the progress that Switzerland has made since then. It is based on a clear, political will to enhance the integrity of Switzerland's financial centre and the strong commitment of the authorities concerned. The subject of the review is the legislative system on the one hand and the effectiveness of the measures for combating money laundering and terrorist financing which Switzerland took based on the 40 FATF recommendations which were revised in 2012.
In relation to the legal system, Switzerland was assessed as compliant or largely compliant in 31 of the 40 recommendations. In assessing effectiveness as a key element of the FATF's evaluation of Switzerland, it fared well in seven of the eleven topic areas examined. In addition, the FATF found no significant gaps in the system.
Overall Switzerland's results can be considered to be good even in comparison to the other countries which have already been reviewed. Switzerland must, however, pursue its efforts in combating money laundering and terrorist financing which is why the report contains a series of recommendations to improve Swiss legislation and its implementation.
In the case of legislation, Switzerland got good marks amongst other things for the criminalisation of money laundering and terrorist financing, mutual assistance, targeted financial sanctions, the transparency of legal entities and legal constructs (including trusts) and the Money Laundering Reporting Office Switzerland (MROS). The FATF did, however, find some vulnerabilities in the system, in particular in the preventive measures and the subordination to the Money Laundering Act of lawyers, notaries and fiduciaries relating to some non-financial activities such as the establishment of companies and trusts.
With regard to the effectiveness of the system, the FATF underscores the good understanding of money laundering and terrorist financing risks in Switzerland, the quality of the analysis of financial information by the Money Laundering Reporting Office Switzerland (MROS) and its appropriate use in criminal investigations. In addition, the FATF recognises the effectiveness of criminal prosecution in the area of money laundering and terrorist financing and the quality of international judicial cooperation. It is also welcomed that Switzerland has seized substantial sums and has refunded these to the countries which suffered losses through bribery. It also underlines the appropriate implementation of targeted financial sanctions and judges the risk-based supervision developed by FINMA to be positive.
In contrast, the FATF voices criticism of certain aspects of financial intermediary supervision and the international cooperation of the MROS. There is also room for improvement in the implementation of preventive measures on the part of the financial intermediaries. On this point, the number of suspicious activity reports is considered to be too low in relation to the significance of the Swiss financial centre. The coexistence of the obligation to notify and the right to report in practice leads to confusion.
Switzerland will be subject to a follow-up process which is normal in the context of the FATF evaluations. The Federal Department of Finance (FDF) will analyse the recommendations of the report in the context of the interdepartmental coordinating group on combating money laundering and the financing of terrorism (CGMF) and will submit a corresponding proposal in 2017 to the Federal Council.
Address for enquiries
Anne Césard, Deputy Head of Communications, State Secretariat for International Financial Matters SIF
tel. +41 58 462 62 91, firstname.lastname@example.org
Federal Department of Finance