Anti-money laundering act

Swiss SEC RIAs do their duty

Swiss SEC RIAs, as members of a self-regulatory organization or directly registered with FINMA participate in the fight against money laundering, the covert introduction of illegally acquired assets into the legitimate economy with the aim of disguising their true illegal origin.

This may take place in three phases:

Phase 1: Placement
In this phase, the assets (primarily cash) are paid into banks and thus turned into bank money, or used to purchase assets that can be liquidated at short notice.

Phase 2: Layering
The goal of this phase is to spread the money placed in phase 1. It often involves complex international transactions using, amongst other things, offshore banks and bogus companies. Another way to spread the money is via a myriad of confusing and seemingly unconnected transfers.

Phase 3: Integration
The integration phase is when the assets are reintroduced into the legal economy, which may involve purchasing assets (e.g. real estate or precious metals) or shareholdings etc.

Money laundering is usually associated with drug trafficking or organized crime. However, there are many other crimes which may be predicate offences to money laundering, e.g. embezzlement, corruption, extortion or human trafficking, to name just a few.

What does Switzerland do to against money laundering?

Switzerland’s mechanisms for combating money laundering were established with the Agreement on Due Diligence (CDB) in 1977 and have been expanding ever since.

Today they include provisions in the Swiss Penal Code (Art. 305bis and 305ter StGB), the Federal Act on Combating Money Laundering and Terrorist Financing in the Financial Sector (AMLA) and a corresponding Ordinance of the Swiss Financial Market Supervisory Authority (FINMA) on the Prevention of Money Laundering and Terrorist Financing (FINMA Anti-Money Laundering Ordinance, AMLO-FINMA).

Swiss law is therefore broadly in compliance with the international recommendations of the Financial Action Task Force (FATF). The FATF report on the third country evaluation of April 2005 attested that Switzerland has a well functioning network of preventative measures against money laundering and terrorist financing.

However, the Federal Department of Finance (FDF) did look into the implementation of individual criticisms that FATF experts had leveled at Switzerland's anti-money laundering mechanisms. The resulting revised Anti-Money Laundering Act came into force, after the referendum period had expired unused, on February 1, 2009. The Anti-Money Laundering Ordinance was subsequently also revised, with the updated version entering into force on January 1, 2011.

The Agreement on Due Diligence (CDB), which is issued by the Swiss Bankers Association (SBA) as a set of self-regulation guidelines and is revised and updated every five years, has since 1977 laid down the obligations of banks with regard to the identification of clients and beneficial owners. It prohibits active assistance in the flight of capital and tax evasion. The statutory bank auditors are commissioned by the banks and FINMA to verify bank compliance with this Agreement. Special investigators and a CDB Supervisory Board assess breaches of the Agreement, and offences are punishable by fines of up to CHF 10 million.

Text source: Swiss Bankers Association 

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