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Combating Money Laundering
1 Money laundering and its prevention
Under the Swiss Criminal Code money laundering is defined as any act "that is aimed at frustrating the identification of the origin, the tracing or the confiscation of assets which, as the perpetrator knows or must assume, originate from a felony" (Art. 305bis SCC); English translation). This includes any act which conceals or disguises assets of criminal origin or assets that have been obtained through serious crime. The perpetrator's aim is to give the impression that the funds have been obtained legally. This act of disguise occurs in the legal financial market through all sorts of investment activities. The originally "dirty" money is thus "laundered" and can enter normal circulation within legal trading circles.
Combating money laundering is an important part of the overall fight to thwart drug dealing, organised crime and, since a number of years, also against terrorist financing. The extensive data that is required to be collected and stored for the purpose of combating and prosecuting money laundering, has proven useful for investigations into terrorist activities; for this reason, the original regulations governing the fight against money laundering are also applied today, in a slightly adapted form, in countering terrorist financing. In the international context, the terms AML/CFT Regulations (Anti-Money Laundering / Countering the Financing of Terrorism) have therefore emerged becoming the current technical term among experts.
As the laundering of money most often takes place in another country compared to where the predicate offence was committed, it is important that the fight against money laundering is internationally coordinated in order to close loopholes, as far as possible, in regulations or in criminal prosecution law. This requires national regulations that are comparable and consistent with each other. In order to achieve this, international, multilateral standards have been drawn up to provide the foundation for national regulations.
2 International standards
The principal foundation for international efforts in the area of combating money laundering and terrorist financing is formed by the 49 Recommendations of the Financial Action Task Force on Money Laundering FATF (Groupe d’action financière sur le blanchiment de capitaux - GAFI). This includes the 40 Recommendations on combating money laundering and terrorist financing, as well as the 9 Special Recommendations relating to terrorist financing.
FATF is an inter-governmental body whose aim is to devise and promote measures aimed at combating money laundering and (since autumn 2001) terrorist financing. Its membership comprises 32 countries, including Switzerland, and two international organisations (the European Commission and the Gulf Cooperation Council). Its members include the major financial centres of Europe, North and South America, Asia and Africa. Although the FATF secretariat is physically located at the OECD (Organisation for Economic Cooperation and Development), the FATF itself is not part of that organisation. Around 150 countries worldwide have committed themselves to the FATF recommendations; this occurs via the FATF itself and a network of regional bodies, known as the FATF-style regional bodies (FSRBs), which perform the same function for their members as does the FATF for its members. The FATF and the FSRBs check compliance by their members with the recommendations and, if necessary, resort to measures to enforce implementation of the recommendations.
The 49 FATF Recommendations cover the minimum requirements that a system has to meet in its fight against money laundering and terrorist financing, in order to be deemed adequate by international standards. The recommendations cover the required statutory offences and enforcement measures, such as freezing and confiscation of assets; on preventative measures such as the obligations of due diligence and reporting of suspicious business relationships and transactions, to be respected by financial intermediaries and by certain other providers of professional services; on international standards. The recommendations cover the required statutory offences and enforcement measures, such as freezing and confiscation of assets; on preventative measures such as the obligations of due diligence and reporting of suspicious business relationships and transactions, to be regulation and supervision of financial services providers; and on the institutional arrangements of the system, as well as on the pertinent aspects of international cooperation, such as mutual legal and administrative assistance, extradition and the ratification and implementation of the relevant international instruments.
3 The Swiss system
As a member of FATF, Switzerland too, has made a commitment to comply with the 49 Recommendations. The Swiss system for combating money laundering and terrorist financing has thus been influenced by these standards.
The objectives of the Swiss system for combating money laundering include protecting Switzerland's integrity and reputation as a financial centre and ensuring the fair fulfilment of the centre’s economic functions (protection of its reputation and functions). It is not aimed at consumer protection.
The cornerstone of the preventive side of the fight against money laundering is formed by the Federal Act on Combating Money Laundering in the Financial Sector (Anti-Money Laundering Act, AMLA) and the implementing regulations relating to it, which form part of administrative law and which govern the Swiss system of supervision with respect to combating money laundering.
Within the framework of criminal prosecution of money laundering and terrorist financing, the following provisions from the Swiss Criminal Code (SCC) are of the most relevance:
- Art. 305bis SCC (English translation): Money Laundering
- Art. 305ter SCC (English translation): Insufficient Diligence in Financial Transactions and Right to Report
- Art. 260ter SCC (English translation): Criminal Organisations
- Art. 260quinquies SCC (English translation): Financing Terrorism
- Art. 69 to 72 SCC (English translation): Confiscation
- Art. 102 and 102a SCC (English translation): Corporate Criminal Responsibility.
Further important elements are provided by national and international mutual legal assistance in criminal matters and administrative assistance.
Last update: 07.09.2007