Combating Money Laundering: International Exchange of Financial Information
Keywords: Money laundering
Switzerland has comprehensive and internationally recognised operative provisions for fighting money laundering and terrorist financing, the main legal framework being the Anti Money-Laundering Act of 10 October 1997. An important institutional pillar is the Money Laundering Reporting Office Switzerland (MROS), which receives suspicious activity reports on money laundering and its predicate offences, organised crime and terrorist financing from banks, fiduciaries and asset managers, amongst others. MROS analyses the reports and, if necessary, forwards them to the prosecution authorities.
The analysis of suspicious activity reports requires MROS to exchange information with Financial Intelligence Units (FIUs) abroad. However, under current national law on official secrecy and bank client confidentiality MROS is not permitted to exchange financial information such as bank account numbers, money transactions or account balances with its foreign counterparts in the context of mutual assistance.
The current situation is unsatisfactory for all concerned parties, including Switzerland, and has a negative impact on fighting money laundering; various foreign FIUs conversely refrain from sharing financial information with MROS. It is therefore in Switzerland’s interests to put an end to the hindrance of mutual assistance through bank client confidentiality and to enable MROS to participate in the exchange of all available information.
Better and secure communication
The FIUs – including since 1998 MROS – are consolidated on an international level in the Egmont Group. The aim of the Egmont Group is to enhance the efficient and secure exchange of information and to set standards for international co-operation.
The main international body for fighting money laundering and terrorist financing is the Financial Action Task Force (FATF) of which Switzerland is a member. The FATF’s purpose is to establish international standards for fighting money laundering and terrorist financing by issuing recommendations. The recommendations are currently under review, and the FATF expects to adopt the revised standards at its plenary session in February 2012. Two of the recommendations concern the tasks and powers of national FIUs, including those of MROS.
Adapting Swiss law to international practices
In the course of reviewing its recommendations the FATF has clarified the requirements concerning the international exchange of financial information. Under the new recommendations FIUs are now explicitly bound to exchange all available information and may no longer be hindered by national secrecy laws. This means that MROS is obliged to forward financial information and may no longer withhold any data on bank client confidentiality grounds.
Out of the 127 members of the Egmont Group MROS is the only FIU that is obliged to withhold information on account of national secrecy laws. In July 2011, the Egmont Group declared this practice to be a breach of its principles and threatened to suspend MROS from membership if Switzerland did not take corrective action within one year. Suspending MROS from the Egmont Group could have a negative effect on the reputation of Switzerland’s financial market.
In view of the fact that the stance of the FATF and Egmont Groups is in keeping with Switzerland’s interests to participate fully in mutual assistance, the Federal Council considers it appropriate to bring national law on information exchange between FIUs into compliance with the FATF recommendations and the principles of the Egmont Group. This requires a partial revision of the Anti Money-Laundering Act, essentially empowering MROS to transmit specific financial information such as bank account numbers, or information on money transactions or bank balances to foreign FIUs with the aim of facilitating the fight against money laundering and terrorist financing and thus strengthening the integrity of Switzerland’s financial market.
The amendment will also vest MROS with greater authority to gather information from financial intermediaries, allowing the Swiss FIU to request information also from financial intermediaries who do not submit their own suspicious activity report under Article 9 of the Anti Money-Laundering Act or under Article 305ter paragraph 2 of the Swiss Criminal Code. This, in turn, will not only improve the quality of the information MROS transmits to foreign FIUs but also aid MROS’s own analysis of suspicious activity reports. Under the new powers MROS shall remain a reporting office whose function is to analyse and forward reports to the prosecution authorities but not to carry out police investigations
The consultation procedure will last until 27 April 2012.
For the complete documentation see the pages in German, French or Italian
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