Financial Crime World

Here is the article rewritten in markdown format:

Financial Crime Definition in Switzerland: A Comprehensive Overview

Introduction

The regulation of money laundering in Switzerland is based on two pillars: criminal law and anti-money laundering legislation. This comprehensive overview will provide an understanding of the financial crime definition in Switzerland, its regulatory framework, and the role of the Swiss Financial Market Supervisory Authority (FINMA) in monitoring compliance with anti-money laundering regulations.

Criminal Law and Anti-Money Laundering Legislation

The Swiss Criminal Code defines money laundering as a criminal offense, punishable by fines and imprisonment. The Federal Act on Combating Money Laundering and Terrorist Financing in the Financial Sector (Anti-Money Laundering Act, AMLA) requires financial intermediaries to implement due diligence and disclosure requirements to prevent the laundering of criminal proceeds.

Regulatory Framework

The Swiss Financial Market Supervisory Authority (FINMA) is responsible for monitoring compliance with anti-money laundering regulations by financial service providers such as banks, securities firms, insurers, and institutions under the Collective Investment Schemes Act. FINMA has issued a detailed ordinance in relation to this Act (FINMA Anti-Money Laundering Ordinance, FINMA AMLO).

Due Diligence and Disclosure Requirements

Financial intermediaries must comply with a range of due diligence and disclosure requirements to prevent money laundering, including:

  • Verifying the identity of contracting partners
  • Identifying the beneficial owner of assets brought into Switzerland
  • Implementing organizational measures to prevent money laundering, such as:
    • Issuing internal directives
    • Training staff
    • Performing inspections

Reporting Suspicious Activity

If there is any suspicion of money laundering in a business relationship, financial intermediaries must submit a report to the Money Laundering Reporting Office (MROS) of the Federal Department of Justice and Police. FINMA engages recognized audit firms to assist it in monitoring compliance with these requirements among its supervised institutions.

Industry-Specific Regulations

Industry-specific regulations apply to institutions subject to prudential supervision, such as:

  • Banks: governed by the “Agreement on the Swiss Banks’ Code of Conduct with Regard to the Exercise of Due Diligence (CDB 20)” of 13 June 2018
  • Securities firms: governed by FINMA AMLO
  • Insurers: may choose to be supervised by FINMA or affiliated with the self-regulatory organization of the Swiss Insurance Association (SRO-SIA)

Definition and Cycle of Money Laundering

Money laundering is defined as channeling funds from illegal activity into the legal economy. The money laundering cycle can be broken down into three phases:

  • Placement: introducing illegal funds into the financial system
  • Layering: concealing the source of the funds through complex transactions
  • Integration: integrating the laundered funds back into the legitimate economy

Financial intermediaries must comply with stringent due diligence and reporting requirements to prevent money laundering.

Conclusion

In summary, Switzerland has a comprehensive regulatory framework in place to combat financial crime and maintain the integrity of its financial system. FINMA plays a crucial role in monitoring compliance with anti-money laundering regulations and takes measures to correct any breaches of the law or other irregularities.