Financial Crime World

Switzerland Cracks Down on Financial Crime: A Look at the Country’s Laws and Regulations

Switzerland, known for its robust banking sector and business-friendly environment, has faced increasing scrutiny in recent years regarding its role in money laundering and terrorist financing. In response, the Alpine nation has strengthened its stance against illicit activities by enforcing stricter financial crime laws and regulations.

The Federal Department of Foreign Affairs (FDFA)

The FDFA, a key player in Switzerland’s fight against financial crime, collaborates with domestic and international partners to enforce laws against corruption, money laundering, and terrorist financing, according to its website.

Switzerland’s Anti-Money Laundering Act (AMLA)

  • The AMLA, enacted in 1998, requires financial institutions and designated professionals (e.g., lawyers and notaries) to:
    • Verify clients’ identities
    • Report suspicious transactions
    • Maintain records

Membership in the Financial Action Task Force (FATF)

Switzerland is a member of the FATF, an international organization that sets standards and promotes effective implementation of legal measures against money laundering, terrorist financing, and related threats to the financial system.

Despite efforts to combat financial crimes, Switzerland’s image as a haven for illicit funds has persisted. In October 2020, Switzerland agreed to update its banking secrecy laws with the United States to improve transparency and cooperation.

Swiss Financial Market Supervisory Authority (FINMA)

  • FINMA oversees financial institutions to ensure they comply with various regulations, including those related to money laundering and terrorist financing
  • In 2019, FINMA fined several banks for failing to prevent money laundering

Swiss Money Laundering Reporting Office (MROS)

  • In November 2020, the Swiss government announced plans to expand MROS’s abilities to analyze suspicious transactions and pursue investigations
  • Expansion includes an increase in staff and a broader mandate to scrutinize certain sectors, such as real estate and luxury goods trading

As Switzerland continues its commitment to combatting financial crimes, the FDFA and other stakeholders will likely explore new initiatives and collaborations.The following points summarize the key aspects of Switzerland’s laws and regulations against financial crimes:

  • FDFA’s role in enforcing financial crime laws
  • AMLA, requiring identity verification, reporting suspicious transactions and maintaining records
  • Membership in FATF and its evaluation and recommendations
  • Updating banking secrecy laws to improve transparency
  • FINMA’s oversight of financial institutions and enforcement of money laundering regulations
  • Expansion of MROS to strengthen its abilities to analyze suspicious transactions and pursue investigations.