Banking Crisis
Swiss Told To Get Tougher On Financial Corruption, Criminals
Leading pressure group Transparency International has called on Switzerland to do more in tackling corruption and financial crime.
Pressure group Transparency
International has called on Switzerland to do more in
tackling corruption and financial crime and, controversially,
urged the Alpine state to produce public registers of
beneficial ownership.
The body claims Swiss law is too lax and that the country must make it much harder for the corrupt to hide behind secret companies if the country wants to keep criminal activity out of its financial system.
“Switzerland needs to extend the scope of its anti-money laundering legislation in order to prevent the corrupt from hiding the proceeds of crime and corruption on its soil. No longer should the corrupt be able to get away with illicit activities, often linked to international organised crime, with the help of Switzerland,” said Eric Martin, chair of Transparency International Switzerland.
Switzerland has toughened its stance on money laundering in recent years, including amending famous Banking Law of 1934. The law was passed after Adolf Hitler and his Nazi Party established a dictatorship in Germany and is often understood that the measure was designed to protect German Jews using Swiss banks as a shelter. However, a paradox of the law is that money stolen from Jewish families under Nazi rule was also, it is alleged, stashed in Swiss banks. A further twist came in the late Noughties when banks such as UBS were punished for enabling wealthy US citizens to evade tax. UBS, for example, paid a $780 million fine to settle a civil charge; it also settled a criminal charge. Hundreds of names of clients were allowed to be transferred to the US - a historic breach of Swiss bank secrecy law.
Despite these developments, Switzerland does not require the identities of people who own or control companies. This secrecy makes it easier for corrupt foreign public officials and business people to hide the origin of their stolen money from law enforcement, the public and governments who may seek its return, Transparency International says.
The body goes on to recommend the introduction of public registers – echoing calls made by UK Prime Minister for the The Crown dependencies. The proposed register has caused stir in the UK, especially among the wealthy who want to remain anonymous. It is designed to unmask accountants, lawyers and business figures who use shell companies – often located in offshore tax havens such as Guernsey, Jersey and the Isle of Man – to hide the identity of ultimate beneficiaries.
“Registers of beneficial ownership need to be created and made public (in Switzerland). Bearer shares should either be abolished or shareholders should be required to register or deposit their shares with a financial intermediary,” Transparency Switzerland said in a statement.
Other suggestions from Transparency include better protection for whistleblowers and a restriction in the size of cash payments when buying luxury goods.
“It is well known that cash payments are frequently used for money laundering and play an important role in cross-border crime.... calling for a legal limitation of the sums that can be paid in cash. Payments for real estate or luxury goods exceeding 100,000 francs should be settled through a financial intermediary subject to the Swiss Anti-Money Laundering Provisions,” Transparency added.
The body claims Swiss law is too lax and that the country must make it much harder for the corrupt to hide behind secret companies if the country wants to keep criminal activity out of its financial system.
“Switzerland needs to extend the scope of its anti-money laundering legislation in order to prevent the corrupt from hiding the proceeds of crime and corruption on its soil. No longer should the corrupt be able to get away with illicit activities, often linked to international organised crime, with the help of Switzerland,” said Eric Martin, chair of Transparency International Switzerland.
Switzerland has toughened its stance on money laundering in recent years, including amending famous Banking Law of 1934. The law was passed after Adolf Hitler and his Nazi Party established a dictatorship in Germany and is often understood that the measure was designed to protect German Jews using Swiss banks as a shelter. However, a paradox of the law is that money stolen from Jewish families under Nazi rule was also, it is alleged, stashed in Swiss banks. A further twist came in the late Noughties when banks such as UBS were punished for enabling wealthy US citizens to evade tax. UBS, for example, paid a $780 million fine to settle a civil charge; it also settled a criminal charge. Hundreds of names of clients were allowed to be transferred to the US - a historic breach of Swiss bank secrecy law.
Despite these developments, Switzerland does not require the identities of people who own or control companies. This secrecy makes it easier for corrupt foreign public officials and business people to hide the origin of their stolen money from law enforcement, the public and governments who may seek its return, Transparency International says.
The body goes on to recommend the introduction of public registers – echoing calls made by UK Prime Minister for the The Crown dependencies. The proposed register has caused stir in the UK, especially among the wealthy who want to remain anonymous. It is designed to unmask accountants, lawyers and business figures who use shell companies – often located in offshore tax havens such as Guernsey, Jersey and the Isle of Man – to hide the identity of ultimate beneficiaries.
“Registers of beneficial ownership need to be created and made public (in Switzerland). Bearer shares should either be abolished or shareholders should be required to register or deposit their shares with a financial intermediary,” Transparency Switzerland said in a statement.
Other suggestions from Transparency include better protection for whistleblowers and a restriction in the size of cash payments when buying luxury goods.
“It is well known that cash payments are frequently used for money laundering and play an important role in cross-border crime.... calling for a legal limitation of the sums that can be paid in cash. Payments for real estate or luxury goods exceeding 100,000 francs should be settled through a financial intermediary subject to the Swiss Anti-Money Laundering Provisions,” Transparency added.
The idea of public registers of beneficial ownership has been controversial precisely because owners, such as those in countries with weak public laws or corrupt and aggressive regimes, could, it is feared, use such information to target wealthy individuals.
