Financial Crime World

Swiss Authorities Make Progress in Preventing Terrorist Financing, But Room for Improvement Remains

Recent Assessment by FATF Praised Switzerland’s Efforts, but Highlights Areas for Improvement

A recent assessment by the Financial Action Task Force (FATF) has commended Switzerland’s efforts to combat terrorist financing and money laundering, while also identifying several areas where improvement is needed. The report evaluated the country’s anti-money laundering and counter-terrorist financing (AML/CFT) regime, concluding that while Switzerland’s AML/CFT system is technically robust, it still requires further strengthening to be fully effective.

Significant Progress Made Since 2005

Since its previous assessment in 2005, Switzerland has made significant strides in bolstering its AML/CFT regime. This progress can be attributed to a strong political commitment to promoting the integrity of its financial center. Legal reforms have been implemented to align with FATF recommendations and address the country’s money laundering risks. Law enforcement authorities have also demonstrated their effectiveness in investigating and prosecuting cases, including several high-profile corruption cases that resulted in the repatriation of large sums to affected countries.

Areas for Improvement

Despite the progress made, the assessment team identified several areas where improvement is needed:

  • Strengthening Supervisory Control: Supervisory authorities were encouraged to strengthen their control over financial institutions’ reporting of suspicious transactions, particularly for banks.
  • More Severe Sanctions: The report recommended that Switzerland’s sanctions for non-compliance with AML/CFT requirements be more severe and serve as a deterrent to other institutions.
  • International Cooperation: While Switzerland was commended for its strong commitment to mutual legal assistance, the FATF encouraged the country to expand its international cooperation efforts, including supervision of financial groups given the importance of its financial center.

Ongoing Efforts to Prevent Terrorist Financing and Money Laundering

The assessment was conducted by the FATF in October 2016 and reflects Switzerland’s ongoing efforts to prevent terrorist financing and money laundering. While progress has been made, further improvement is needed to ensure the country’s AML/CFT regime remains robust and effective. The report welcomed recent measures adopted by Swiss authorities to address some of these concerns and urged effective implementation of new legal provisions.