Countries/Jurisdictions of Primary Concern - Switzerland
Switzerland is a major international financial center. The country’s central geographic location; political neutrality; relative social and monetary stability; sophisticated financial services sector; increasing presence in precious metals refinement; and long tradition of banking secrecy all contribute to Switzerland’s success, while also making Switzerland a prime target for money laundering abuse.
Reports indicate criminals attempt to launder illegal proceeds in Switzerland from a wide range of criminal activities conducted worldwide, including financial crimes, narcotics trafficking, arms trafficking, organized crime, and terrorism financing. Switzerland has been a favored venue for kleptocrats to stash ill-gotten funds. Foreign narcotics trafficking organizations, often based in Russia, the Balkans, Eastern Europe, South America, and West Africa, dominate narcotics-related money laundering operations in Switzerland. According to a 2015 national assessment of the money laundering and terrorist financing risks in Switzerland drawn up by an interdepartmental working group, the main threats for the Swiss financial sector are “fraud, embezzlement, corruption, and participation in a criminal organization.”
There are currently 21 casinos in Switzerland. Every casino must obtain a concession from the Federal Council (the highest authority of the executive branch) that needs to be renewed every 20 years. While casinos are generally well regulated, there are concerns they are being used to launder money. Corrupt casino employees also are known to have facilitated drug money laundering activities.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: //2009-2017.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: NO
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Banks; securities and insurance brokers; money exchangers or remitters; financial management firms and wealth managers; investment companies; insurance companies; casinos; financial intermediaries; commodities traders; and investment advisors
Number of STRs received and time frame: 1,753 in 2014
Number of CTRs received and time frame: Not applicable
STR covered entities: Banks; securities and insurance brokers; money exchangers or remitters; financial management firms and wealth managers; casinos; financial intermediaries; and investment advisors
money laundering criminal Prosecutions/convictions:
Prosecutions: 687 in 2014
Convictions: 57 in 2014
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
Switzerland is a member of the FATF. Its most recent mutual evaluation can be found at: http://www.fatf-gafi.org/countries/#Switzerland
Enforcement and implementation issues and comments:
Within Switzerland, there is a lack of adequate regulation of some designated non-financial business sectors, such as real estate, jewelry, luxury cars, dealers of works of art and antiquities, and commodities like oil, gas, and gold.
As of December 31, 2015, a new legal framework will be in force in Switzerland and target companies issuing bearer shares. The new framework requires such companies to identify beneficial owners owning at least 25 percent of the company’s shares and/or voting power and to freeze suspicious assets without informing the owners. In the wake of the arrests of several members of the Federation International Football Association (FIFA) in May, the Swiss Parliament changed domestic anti-corruption laws to cover international sports associations. The law will allow the authorities to criminally investigate sports officials, identify them as politically exposed persons (PEPs), and apply KYC rules to them. Corruption against private persons will be considered an official crime and therefore not require a plaintiff to be investigated by Swiss authorities.
On November 18, 2015, the Swiss Federal Council also introduced a stricter regime for the country’s approximately 250 freeports storing goods estimated at $100 billion. The new rules will require freeport operators to identify the beneficial owner of diamonds, precious metals, watches, and pieces of art. Under the new regulations, there is now a six-month time limit on the storage of goods intended for export. The deadline can be extended if proper grounds are determined. A 2013 report by the Swiss Federal Audit Office determined that the long-term storage of goods with great value in freeports was indicative of illegal storage for the purpose of tax optimization or to circumvent trade regulations on cultural goods or weaponry.
Persons physically transferring money worth more than $10,600 into or out of Switzerland must specify its origins, its future destination, and its owner, but only if asked by the Swiss authorities.
Switzerland’s role as a global commodities trading hub is increasing. Switzerland is the world's largest trading hub for crude oil and iron ore and is a premiere location for gold refining. Swiss customs and law enforcement authorities should examine the link between commodities and trade-based money laundering. Swiss authorities should take steps to regulate all designated non-financial businesses and professions in accordance with international standards.