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Swiss Private Banking Group Sceptical on Regulatory Changes

Contributing Editor, 11 May 2005


The Swiss Private Bankers Association has expressed scepticism on a number of regulatory changes expected in a draft bill of the Federal Dep...

The Swiss Private Bankers Association has expressed scepticism on a number of regulatory changes expected in a draft bill of the Federal Department of Finance in Switzerland in response to pressures from the Financial Action Task Force on Money Laundering. The SPBG wants a commission of experts to be set up to examine in more detail the implications of changes to Swiss financial regulations. The group, which represents some of Switzerland’s best known private banks, believes moves by the FDF to transform some stock market offences into crimes such as insider trading and share price manipulation should be resisted. The SPBA is particularly against linking such “crimes” to money laundering offences. “This measure has to be rejected as it would transfer the responsibility for the detection and exposure of any violations - currently the stock exchanges' competence — to the financial intermediaries, but it is only the stock exchanges that have the global vision needed to accomplish this task,” the SPBA said in a statement. The SPBA went on to say that such moves would raise “almost insurmountable practical problems for the bank” and would not improve the quality of the current system designed to fight stock market offences. The proposed measures, argues the SPBA, do not address the fundamental question of security for the bank and their employees should criminals or terrorists be exposed. “On the other hand, the FDF's propositions display excessive liberalism regarding the exchange of information between authorities,” said the Geneva-based lobby group. SPBA goes on to argue that the documents submitted for consultation by the FDF did not include any cost-efficiency analysis of the anti-money laundering system in Switzerland. The revision of current money laundering legislation in Switzerland is also in danger of overloading Swiss private banks with more regulation. “Any means to reduce that burden should be studied,” argues the SPBA. “In this respect the FDF's propositions also leave much to be desired: they ignore the possibilities of rationalisation, that the FATF itself accepts, and go beyond the standards set by the latter.” Moves in the FDF’s draft bill that various so-called "risky" professions should also be subject to the anti-money laundering law, such as real estate agents, dealers in fine art, precious stones and precious metals, with other professions left out, are also criticized by the SPBA. “These propositions do not seem to be coherent, transparent or fair. Furthermore, they could put the banks in a delicate position regarding their relationships with the targeted professions,” said the SPBA. The lobby group concludes: “The proposed measures trivialize the notion of money laundering. This is a regrettable deviation which deflects attention from the real objective, namely to combat serious crime and terrorism.” The SPBA believes the way forward on the issue should be for a commission of experts to be appointed from a cross-section of professions. “Its mandate would be to examine all the improvements to be made to Switzerland's system for combating money laundering and terrorist financing.” The group also feels that it would be useful to carry out a cost-efficiency analysis of measures that already exist and of those to come. “This is what Switzerland's rival financial centres are doing and what the FDF itself recommended less than two years ago.”

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