Swiss Report Highlights Money Laundering and Terrorist Financing Risks

A recent report by the Swiss Federal Council has shed light on the significant risks posed by money laundering and terrorist financing in the country’s financial sector. The report highlights the need for robust measures to prevent and combat these illegal activities.

Predicate Offences

The report found that predicate offences such as drug trafficking and fraud are major contributors to money laundering and terrorist financing. These criminal activities provide a source of funds for laundered money, which can then be used to finance further crimes.

Foreign Companies Pose Higher Risk

The report notes that foreign companies pose a significantly higher risk of money laundering than Swiss companies. This is due to their involvement in international business and financial cycles, making them more vulnerable to criminal activities.

Advisory Activities Pose Risk

The advisory activities of Swiss players, such as lawyers and notaries, with regard to the establishment and management of foreign companies also pose a significant risk. These individuals may be unaware or complicit in money laundering and terrorist financing activities.

Lack of Transparency among Domiciliary Companies

The report highlights the lack of transparency among domiciliary companies, which are often used as shell companies by criminals to launder money. These companies are more frequently subject to suspicious activity reports (SARS) and exacerbate the threat to the Swiss financial centre.

Crypto Assets and Crowdfunding Platforms

The report also notes that crypto assets and crowdfunding platforms pose risks for money laundering and terrorist financing. While these technologies have the potential to revolutionize the way we think about finance, they also create new opportunities for criminals to launder money and fund terrorist activities.

Recommendations

To combat these risks, the Swiss Federal Council has recommended a number of measures:

• Extend the obligation to enter associations in the commercial register to include associations with a heightened terrorist financing risk
• Continue to consistently implement the provisions on combating money laundering and terrorist financing
• Raise awareness among non-profit organizations (NPOs), financial intermediaries, and competent authorities about the risks of money laundering and terrorist financing

Conclusion

The Swiss Federal Council’s report highlights the significant risks posed by money laundering and terrorist financing in the country’s financial sector. To combat these risks, it is essential to implement robust measures to prevent and combat these illegal activities. The recommendations outlined in this report are a crucial step towards achieving this goal and ensuring the integrity of the Swiss financial system.