Financial Crime World

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Swiss Financial System Faces Growing Risks

Zurich, Switzerland - A report from the Swiss Financial Market Supervisory Authority (FINMA) has highlighted a range of growing risks facing the country’s financial system. The Risk Monitor 2020, published on [date], warns that the sector is exposed to significant threats from cyber attacks, money laundering, and the potential collapse of the LIBOR interest rate benchmark.

Growing Risks

The report notes that the dependence on information and communication technologies has created pronounced vulnerabilities among Swiss financial institutions. Cyber Attacks can jeopardize the availability, confidentiality, and integrity of critical services and functions, potentially having far-reaching consequences for the entire financial system.

  • Cyber attacks have become more frequent and intense in recent months
  • Many financial institutions have reported distributed denial-of-service (DDoS) attacks on their infrastructure
  • Blackmail letters demanding bitcoin payments to prevent further attacks have been received by several institutions

Money Laundering Risks

The FINMA report also highlights the ongoing risk of Money Laundering in the Swiss financial system. The country’s reputation as a leading global cross-border wealth management hub makes it particularly vulnerable to this type of fraud.

  • Shrinking margins may lead financial institutions to pursue relationships with high-risk clients from emerging markets
  • This increases the likelihood of corruption and embezzlement

LIBOR Risks

The risk monitor also warns about the Potential Collapse of LIBOR, which is used as a benchmark for interest rates in many financial contracts. The report notes that uncoordinated approaches to replacing LIBOR, lack of operational readiness, and opposition from counterparties are all major obstacles to a smooth transition.

Call to Action

FINMA’s Risk Monitor 2020 is based on quarterly self-assessments by 26 banks and securities firms selected on risk-based grounds. The report provides valuable insights into the key risks facing the Swiss financial system and highlights the need for financial institutions to take proactive measures to mitigate these threats.

In response, FINMA has called on financial institutions to:

  • Strengthen their Cyber Defenses
  • Improve their Anti-Money Laundering Controls
  • Develop contingency plans for the potential collapse of LIBOR