Banking secrecy

Swiss banking secrecy protects the privacy of bank clients. But its validity is not unlimited. If there are suspicions of criminal activities such as terrorism, organized crime, money laundering or tax fraud, it is lifted – and the authorities are given access to banking information.

It is not lifted in cases of tax evasion. This is countered by means of a 35% withhholding tax and other measures (e.g. as part of the tax-assessment procedure). This withhholding tax is the highest of all the member countries of the Organisation for Economic Cooperation and Development (OECD). One loophole has been closed by the agreement with the European Union (EU) on the taxation of savings interest. This imposes a tax retention on all interest income from foreign sources accruing to natural persons resident for tax purposes in an EU member state.

No anonymous accounts exist in Switzerland. The bank is obliged to know the identity of the account holder, and of the actual financial beneficiary if applicable.

Banking secrecy exists in many other countries. The Luxembourg and Austrian systems are closest to Switzerland.

IMF Follow-up evaluation of the stability of the Swiss financial system

Bern, 21.11.2006 - The International Monetary Fund (IMF) has updated the 2001 evaluation of the Swiss financial sector (Financial Sector Assessment Programme / FSAP). Through its participation in the FSAP, Switzerland acknowledges its responsi-bility as an important international financial centre and reinforces its interest in the stability of its financial system. In doing so, Switzerland also contributes to the stability of the global financial system. Furthermore it supports the imple-mentation of internationally recognised financial sector standards. The IMF de-legation held intensive discussions with the regulatory and supervisory au-thorities, the Swiss National Bank and representatives from all segments of the financial sector. The IMF will continue the dialogue with the authorities in Feb-ruary/March 2007 and consequently finalise a report on the stability of the Swiss financial system.

The IMF visit took place between 9 - 20 November. The numerous discussions with the authorities (the Swiss Federal Banking Commission, the Federal Office of Private Insurance, the Federal Social Insurance Office, the Federal Finance Administration, and the Swiss National Bank) and business players were open and constructive. The delegation was able to further deepen its understanding in relation to the first country report in 2001.

FSAP updates are envisaged approximately every five years for countries which are important for the global financial system. The emphasis in this year's evaluation in Switzerland was placed on the regulatory and supervisory system, the resistance to crises of the financial sector and conformity with selected, internationally recognised financial sector standards. Particular emphasis was placed on supervision in the in-surance and pensions sectors. The current regulatory reform projects in the financial sector were also discussed.

Specific findings from the follow-up evaluation will only be available next spring. For the time being, the initial conclusions will be discussed with the Swiss authorities within the scope of the annual country report of the IMF in February/March 2007 (Ar-ticle IV Consultations). A report will be submitted to the IMF Executive Board in June 2007. It is envisaged publishing the Financial System Stability Assessment (FSSA) together with the Article IV country report.

Address for enquiries:

David S. Gerber, Head of Financial Markets and Services, Federal Finance Administration (FFA), tel. 031 325 15 28

Editor:

Federal Department of Finance

Internet: http://www.efd.admin.ch

Federal Department of Finance FDF Contact: info@gs-efd.admin.ch,

IMF follow-up evaluation of the stability of the Swiss financial system

Bern, 04.06.2007 - The International Monetary Fund (IMF) has updated its extensive evaluation of the Swiss financial sector within the scope of the Financial Sector Assessment Programme (FSAP) dating from 2001. The IMF delegation held intensive discussions with the regulatory and supervisory authorities, the Swiss National Bank and representatives from all segments of the financial sector. The results of the evaluation are now available as a report on the stability of the financial system in Switzerland. This report will be published with the standard annual surveillance report. Also, a series of background analyses on the financial sector will be published in the next few days. By taking part in the FSAP, Switzerland is acknowledging its responsibility as a highly integrated, global financial centre. It thereby reinforces its commitment to strengthen financial stability at the national and international levels.

Content of the evaluation

The main issues of the FSAP update in Switzerland were the regulatory and supervisory system, the financial sector's resistance to crises and the application of selected, international financial sector standards. Particular attention was paid to supervision in the insurance and pension fund sector. Furthermore, the current regulatory reform projects in the financial sector were discussed. The numerous discussions with the authorities (the Swiss Federal Banking Commission, the Federal Office of Private Insurance, the Federal Social Insurance Office, the Federal Finance Administration, the Swiss National Bank) and the private sector were open and constructive. The delegation was able to further expand its findings from the first FSAP in 2001.

Results of the evaluation

A) Banks

The banking sector with its dualistic structure is highly developed. Both big banks are, due to their size and their international diversification, systemically relevant. As is the case with the big banks, the banking sector is overall rated to be resilient to crises and stable. Against the backdrop of the present favourable macroeconomic environment, financial market risks are primarily associated with external factors, which the results of the stress tests carried out confirm. The banking sector as a whole is assessed to be resistant to various macroeconomic shocks. This picture is corroborated by corresponding analyses carried out for the big banks. In each stress scenario examined, the international regulatory minimum capital requirements were able to be met, even the stringent requirements of Swiss banking supervision. The liquidity stress tests carried out with the big banks in addition show that the latter are very solvent and robust.

Since the 1990s the Swiss banking system has undergone substantial consolidation. The IMF considers that further consolidation of the banking sector would lead to gains in efficiency, although banking productivity has risen continuously since 2002. The retail sector, which is geared to the domestic market, has, however, shown a lower level of cost efficiency. In the medium term a weakening of the potential growth could see pressure to consolidate rise again. In the case of the cantonal banks, the IMF recognises a certain need for action in the governance structures.

B) Insurance

The financial difficulties with which several big insurance companies still had to struggle at the start of 2003 were able to be resolved due to corrective measures, sectoral adjustments and the subsequent, general, economic recovery. The IMF recognises in particular the considerable regulatory reforms in the insurance sector in the last few years. For example the introduction of the Swiss Solvency Test (SST) is characterised by the IMF as one of the most modern solvency supervision regimes world-wide.

The results from the field tests carried out within the scope of the SST indicate that the market risks in the case of several insurance companies should be paid greater attention. In particular adjustments to share and real estate values as well as falling interest rates could, in the case of life insurers, non-life insurers and health insurers which took part in the SST field tests carried out in 2005, lead to financial stress. In several cases FOPI has taken protective measures. Companies which have currently not achieved full solvency in accordance with SST have time until the end of 2010, however, to build up their solvency accordingly - either by increasing their capital or reducing their risks.

The proportion of intra-group assets which insurance companies hold in associated companies, which not only involve loans but also equity, are estimated by the IMF to be relatively high. The risk within an insurance group of being affected is thereby increased. This could encourage potential liquidity and solvency problems, should the free movement of capital between the units of the same group be restricted.

C) Occupational pension plans

Although the pension funds have to a large extent recovered from the shortages of coverage in the wake of the stock market downturn in 2001 and 2002 and the impact of the persistently low interest rates, the securing of a sufficiently high degree of coverage should continue to be a priority. The stress tests with different scenarios show that the average degree of coverage at the end of 2005 was not yet sufficient for the majority of pension funds so as to avert the danger of shortage of cover. However, this danger is not so pronounced in the case of the defined contributions pension funds.

D) Supervision and regulation

In the last few years Switzerland has actively extended and improved cooperation and the exchange of information with foreign supervisory authorities. This is valued very highly by the IMF. The tripartite agreement between the supervisory banking authorities of Switzerland, the USA and the United Kingdom to monitor both big banks is internationally regarded as a showcase model for good cooperation between supervisory authorities. The IMF recognises the progress of the Swiss Federal Banking Commission (SFBC) in strengthening the supervisory framework for banks. However, the IMF sees room for improvement in the important area of liquidity risk, the monitoring of which should be tackled as a priority with the big banks, due to their systemic importance. Oversight of external auditors should also be reinforced. The SFBC is being urged to utilise the implementation of Basel II to examine in detail and regularly the capital adequacy of both of the big banks. The SFBC should therefore deploy more personnel resources in this sector, and be able to control these resources.

According to the IMF, FOPI should place the emphasis in its controls on the risk management of those insurance companies which, in the findings of the SST, are exposed to higher risks. So that effective supervision of the big and internationally active insurance companies can be ensured, FOPI must also be equipped with sufficient resources.

The IMF supports a strong and independent financial market supervisory authority which should be ensured within the scope of the legislative work in creating FINMA. In contrast to the Swiss authorities, the IMF is of the opinion that the inclusion of principles of regulatory proportionality in the draft law could restrict the ability of FINMA to carry out effective supervision. In addition the IMF would have preferred that FINMA (and not the Federal Finance Department as in the FINMA Act) should have been given the power to carry out proprietary sanctions.

According to the IMF, current supervision of occupational pension funds lacks uniformity and is, in effect, not sufficient. The cause of this weakness is seen by the IMF in the multitude of cantonal supervisory authorities very often with restricted resources. The IMF advocates centralising supervision. However, the (planned) strengthening of supreme supervision and the formation of supervisory regions is, in its opinion, still an improvement compared to the present situation. In addition the IMF calls for standardised and risk-based reserves. The liabilities should more strongly than has been the case up to now (and as is the case already with assets) be shown in the balance sheet at market values.

The IMF recognises the significant progress which the Swiss National Bank (SNB) and the Swiss Federal Banking Commission (SFBC) have achieved in the last few years in the areas of lender of last resort and crisis management measures. The IMF supports extending the dialogue with the most important partner authorities abroad.

The most important IMF recommendations

1. Strengthening the supervisory authorities

The independence of the newly created, integrated financial market supervisory authority FINMA has to be ensured. The authority is to have the power to issue proprietary sanctions. The Swiss Federal Banking Commission and the Federal Office of Private Insurance must have adequate personnel resources and expert knowledge at their disposal. Switzerland supports a financial market supervisory authority which is functional, institutional and financially independent and which guarantees effective supervision. However, Switzerland does not share the reservations of the IMF concerning individual provisions in the draft law.

2. Strengthening supervision of both the major banks
The capital resources of the major banks must be examined within the scope of the implementation of Basel II. Monitoring liquidity risks must be strengthened. Focussed audits on the risks posed by hedge funds should be carried out. Oversight of external auditors should be further extended, so as to strengthen the dual system of supervision. Switzerland is already in the process of revising the liquidity requirements for the major banks. With the new supervisory audit authority, the dual supervisory system will also be strengthened. The other recommendations are being examined.

3. Reducing vulnerabilities in the area of (re-) insurance
Targeted inspections should be carried out on providers of insurance exposed to high market risks. In collaboration with the insurance companies, exposure within a conglomerate should be reduced. Switzerland underlines the fact that supervision will be strengthened where the Swiss Solvency Test (SST) detected weaknesses.

4. Improving the supervisory and regulatory framework in the pension fund sector
The IMF welcomes the intended strengthening of supervision in occupational pension plans, which in its opinion would be more quickly achieved by creating a central supervisory authority. Coverage should be further increased and reserves should be defined according to a risk-based approach. In addition improvements in the governance of the pension funds is considered to be necessary.  Switzerland considers an increase of the partially still insufficient value fluctuation reserve as desirable. Improvements in supervision should be achieved by strengthening supreme supervision and regionalisation of the direct supervision structures.

5. Consideration of measures enabling cantonal banks to be exclusively market-oriented
Cantonal banks must be protected from political influence in the operative sector. The overriding target set for the cantonal banks should be that of profit maximisation exclusively. Their broader social mandates should not be implemented separately, rather than within the context of their primary activities, e.g. in the corresponding distribution of profits to the public sector as (general) owner. Switzerland is of the opinion that the IMF recommendations on market behaviour are unfounded, in particular in view of the intense competition in the retail segment.

Money Laundering Reporting Office Switzerland - All-time High in Number of Reports on Suspicious Financial Transactions in Banking Sector

Berne, 17.04.2007 - While the Money Laundering Reporting Office Switzerland (MROS) received fewer reports on suspicious transactions in 2006 than in the previous year, the quality of reports improved. However, reports from the banking sector on suspicious financial transactions reached an all-time high in the year under review. MROS is an agency at the Federal Office of Police.

With 619 reports on suspicious financial transactions submitted to MROS in 2006, the number of reports received decreased 15.1 percent, from 729 in the previous year. These figures were presented in the 9th MROS Annual Report 2006, published on Tuesday. As in the past few years, this decrease was due to a steady decline in the number of reports from the payment transaction services sector and in particular from the money transmitters, culminating in a substantial drop of 52.9 percent in 2006.

The payment transaction services sector still accounted for a remarkably high share of 26,5 percent of the total reports in 2006. However, the quality of reports improved, a fact that translated in a higher percentage of reports forwarded to the prosecuting authorities for further handling (2006: 57 percent; 2005: 45 percent).  Another result of the better-quality reports is that in 2006 a mere 15 percent of the cases forwarded were dismissed, opposed to 34 percent in the year before.

While the number of reports from the money transfer sector dropped in 2006, the number of reports from the banking sector rose by a significant 22.5 percent to 359. This represents an all-time high in the number of reports submitted by the banking sector since the duty to report suspicious financial transactions became effective in 1998. Accounting for 58 percent of the total of reports in 2006, this sector filed the bulk of reports again for the first time in five years. This increase is largely due to Article 305ter of the Swiss Criminal Code, providing for the right to report suspicious financial transactions without violating the business-client privilege. The compliance services and their efficient monitoring system that take a risk-oriented approach also account for this increase.

The aggregate assets involved in suspicious-transaction reports rose 19.7 percent from about 681 million Swiss francs in 2005 to some 815 Swiss francs in 2006. This increase, too, correlates to the increase in reports from the banking sector.

About 2 percent of the aggregate assets or 1.3 percent of the sum total of reports MROS received in 2006 involved reports filed in relation to suspected terrorism financing. The number of such reports declined from 20 in 2005 to 9 in 2006.  Most of the reports were triggered by lists made available publicly with the names of terrorist suspects.

On the whole, suspicious-transaction reports received in 2006 were of considerably good quality, which translated into respectable 82 percent of reports passed on to the prosecution authorities for further investigation.

The Anti-Money Laundering Control Authority is the supervisory authority of the Confederation for the non-banking sector and part of the system for combating money laundering in Switzerland. The purpose of AMLCA´s supervision of compliance with the obligations of the Anti-Money Laundering Act by the financial intermediaries is to maintain the integrity of Switzerland as a financial centre.

Media informations 2006.

The Anti-Money Laundering Control Authority is the supervisory authority of the Confederation for the non-banking sector and part of the system for combating money laundering in Switzerland. The purpose of AMLCA´s supervision of compliance with the obligations of the Anti-Money Laundering Act by the financial intermediaries is to maintain the integrity of Switzerland as a financial centre.

International standards.

The Anti-Money Laundering Control Authority is the supervisory authority of the Confederation for the non-banking sector and part of the system for combating money laundering in Switzerland. The purpose of AMLCA´s supervision of compliance with the obligations of the Anti-Money Laundering Act by the financial intermediaries is to maintain the integrity of Switzerland as a financial centre.

The 40 Recommendations provide a complete set of counter-measures against money laundering (ML)covering the criminal justice system and law enforcement, the financial system and its regulation, and international co-operation.

They have been recognised, endorsed, or adopted by many international bodies. The Recommendations are neither complex nor difficult, nor do they compromise the freedom to engage in legitimate transactions or threaten economic development. They set out the principles for action and allow countries a measure of flexibility in implementing these principles according to their particular circumstances and constitutional frameworks. Though not a binding international convention, many countries in the world have made a political commitment to combat money laundering by implementing the 40 Recommendations.

Initially developed in 1990, the Recommendations were revised for the first time in 1996 to take into account changes in money laundering trends and to anticipate potential future threats. More recently, the FATF has completed a thorough review and update of the 40 Recommendations (2003). The FATF has also elaborated various Interpretative Notes which are designed to clarify the application of specific Recommendations and to provide additional guidance.
______________________

The 40 Recommendations

Click here to see  the Interpretative Notes to the 40 Recommendations originally adopted by the Plenary of the FATF in June 2003.

Introduction
Legal Systems

Scope of the criminal offence of money laundering
(Recommendations: 1, 2)

Provisional measures and confiscation
(Recommendation 3)

Measures to be taken by Financial Institutions and Non-Financial Businesses and Professions to prevent Money Laundering and Terrorist Financing

Customer due diligence and record-keeping
(Recommendations: 4, 5, 6, 7, 8, 9, 10, 11, 12)

Reporting of suspicious transactions and compliance
(Recommendations: 13, 14, 15, 16)

Other measures to deter money laundering and terrorist financing
(Recommendations: 17, 18, 19, 20)

Measures to be taken with respect to countries that do not or insufficiently comply with the FATF Recommendations
(Recommendations: 21, 22)

Regulation and supervision
(Recommendations: 23, 24, 25)

Institutional and other measures necessary in systems for combating Money Laundering and Terrorist Financing

Competent authorities, their powers and resources
(Recommendations: 26, 27, 28, 29, 30, 31, 32)

Transparency of legal persons and arrangements
(Recommendations: 33, 34)

International Co-operation
(Recommendation 35)

Mutual legal assistance and extradition
(Recommendations: 36, 37, 38, 39)

Other forms of co-operation
(Recommendation 40)

Download the 40 Recommendations (2003)

The 40 Recommendations are downloadable in English (102Kb, pdf, English), French (139Kb, pdf, French) and also 
in Dutch (122Kb, pdf, Dutch), translated by the Dutch Ministry of Finance.

The following translations have not yet been updated to reflect the October 2004 changes
- Polish (469Kb, pdf, Polish) - Translated by the National Bank of Poland
- Portuguese (182Kb, pdf, Portugueuse) - Translated by the Bank of Portugal
- Russian (194Kb, pdf, Russian) - Translated by the Financial Monitoring Committee of the Russian Federation
- Spanish (482Kb, pdf, Spanish) - Translated by GAFISUD

Glossary to the 40 Recommendations

Interpretative Note to Recommendation 40

1. For the purposes of this Recommendation:

“Counterparts” refers to authorities that exercise similar responsibilities and functions.

“Competent authority” refers to all administrative and law enforcement authorities concerned with combating money laundering and terrorist financing, including the FIU and supervisors.
2. Depending on the type of competent authority involved and the nature and purpose of the co-operation, different channels can be appropriate for the exchange of information. Examples of mechanisms or channels that are used to exchange information include: bilateral or multilateral agreements or arrangements, memoranda of understanding, exchanges on the basis of reciprocity, or through appropriate international or regional organisations. However, this Recommendation is not intended to cover co-operation in relation to mutual legal assistance or extradition.

3. The reference to indirect exchange of information with foreign authorities other than counterparts covers the situation where the requested information passes from the foreign authority through one or more domestic or foreign authorities before being received by the requesting authority. The competent authority that requests the information should always make it clear for what purpose and on whose behalf the request is made.

4. FIUs should be able to make inquiries on behalf of foreign counterparts where this could be relevant to an analysis of financial transactions. At a minimum, inquiries should include:

Searching its own databases, which would include information related to suspicious transaction reports.

Searching other databases to which it may have direct or indirect access, including law enforcement databases, public databases, administrative databases and commercially available databases.

Where permitted to do so, FIUs should also contact other competent authorities and financial institutions in order to obtain relevant information.

Introduction

Money laundering methods and techniques change in response to developing counter-measures. In recent years, the Financial Action Task Force (FATF) [1] has noted increasingly sophisticated combinations of techniques, such as the increased use of legal persons to disguise the true ownership and control of illegal proceeds, and an increased use of professionals to provide advice and assistance in laundering criminal funds. These factors, combined with the experience gained through the FATF’s Non-Cooperative Countries and Territories process, and a number of national and international initiatives, led the FATF to review and revise the 40 Recommendations into a new comprehensive framework for combating money laundering and terrorist financing. The FATF now calls upon all countries to take the necessary steps to bring their national systems for combating money laundering and terrorist financing into compliance with the new FATF Recommendations, and to effectively implement these measures.

The review process for revising the 40 Recommendations was an extensive one, open to FATF members, non-members, observers, financial and other affected sectors and interested parties. This consultation process provided a wide range of input, all of which was considered in the review process.

The revised 40 Recommendations now apply not only to money laundering but also to terrorist financing, and when combined with the 9 Special Recommendations on Terrorist Financing provide an enhanced, comprehensive and consistent framework of measures for combating money laundering and terrorist financing. The FATF recognises that countries have diverse legal and financial systems and so all cannot take identical measures to achieve the common objective, especially over matters of detail. The Recommendations therefore set minimum standards for action for countries to implement the detail according to their particular circumstances and constitutional frameworks. The Recommendations cover all the measures that national systems should have in place within their criminal justice and regulatory systems; the preventive measures to be taken by financial institutions and certain other businesses and professions; and international co-operation.

The original FATF 40 Recommendations were drawn up in 1990 as an initiative to combat the misuse of financial systems by persons laundering drug money. In 1996 the Recommendations were revised for the first time to reflect evolving money laundering typologies. The 1996 40 Recommendations have been endorsed by more than 130 countries and are the international anti-money laundering standard.

In October 2001 the FATF expanded its mandate to deal with the issue of the financing of terrorism, and took the important step of creating the 9 Special Recommendations on Terrorist Financing. These Recommendations contain a set of measures aimed at combating the funding of terrorist acts and terrorist organisations, and are complementary to the 40 Recommendations [2].

A key element in the fight against money laundering and the financing of terrorism is the need for countries systems to be monitored and evaluated, with respect to these international standards. The mutual evaluations conducted by the FATF and FATF-style regional bodies, as well as the assessments conducted by the IMF and World Bank, are a vital mechanism for ensuring that the FATF Recommendations are effectively implemented by all countries.

Footnotes:
[1] The FATF is an inter-governmental body which sets standards, and develops and promotes policies to combat money laundering and terrorist financing. It currently has 33 members: 31 countries and governments and two international organisations; and more than 20 observers: five FATF-style regional bodies and more than 15 other international organisations or bodies. A list of all members and observers can be found on the FATF website.
[2] The FATF 40 and 9 Special Recommendations have been recognised by the International Monetary Fund and the World Bank as the international standards for combating money laundering and the financing of terrorism.

Legal Systems

Scope of the criminal offence of money laundering

Recommendation 1

Countries should criminalise money laundering on the basis of United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988 (the Vienna Convention) and United Nations Convention against Transnational Organized Crime, 2000 (the Palermo Convention).

Countries should apply the crime of money laundering to all serious offences, with a view to including the widest range of predicate offences. Predicate offences may be described by reference to all offences, or to a threshold linked either to a category of serious offences or to the penalty of imprisonment applicable to the predicate offence (threshold approach), or to a list of predicate offences, or a combination of these approaches.

Where countries apply a threshold approach, predicate offences should at a minimum comprise all offences that fall within the category of serious offences under their national law or should include offences which are punishable by a maximum penalty of more than one year’s imprisonment or for those countries that have a minimum threshold for offences in their legal system, predicate offences should comprise all offences, which are punished by a minimum penalty of more than six months imprisonment.

Whichever approach is adopted, each country should at a minimum include a range of offences within each of the designated categories of offences [3].

Predicate offences for money laundering should extend to conduct that occurred in another country, which constitutes an offence in that country, and which would have constituted a predicate offence had it occurred domestically. Countries may provide that the only prerequisite is that the conduct would have constituted a predicate offence had it occurred domestically.

Countries may provide that the offence of money laundering does not apply to persons who committed the predicate offence, where this is required by fundamental principles of their domestic law.

Footnotes:
[3] See the definition of “designated categories of offences” in the Glossary.

Recommendation 2

Countries should ensure that:

a) The intent and knowledge required to prove the offence of money laundering is consistent with the standards set forth in the Vienna and Palermo Conventions, including the concept that such mental state may be inferred from objective factual circumstances.

b) Criminal liability, and, where that is not possible, civil or administrative liability, should apply to legal persons. This should not preclude parallel criminal, civil or administrative proceedings with respect to legal persons in countries in which such forms of liability are available. Legal persons should be subject to effective, proportionate and dissuasive sanctions. Such measures should be without prejudice to the criminal liability of individuals.

Provisional measures and confiscation

Recommendation 3

Countries should adopt measures similar to those set forth in the Vienna and Palermo Conventions, including legislative measures, to enable their competent authorities to confiscate property laundered, proceeds from money laundering or predicate offences, instrumentalities used in or intended for use in the commission of these offences, or property of corresponding value, without prejudicing the rights of bona fide third parties.

Such measures should include the authority to: (a) identify, trace and evaluate property which is subject to confiscation; (b) carry out provisional measures, such as freezing and seizing, to prevent any dealing, transfer or disposal of such property; (c) take steps that will prevent or void actions that prejudice the State’s ability to recover property that is subject to confiscation; and (d) take any appropriate investigative measures.

Countries may consider adopting measures that allow such proceeds or instrumentalities to be confiscated without requiring a criminal conviction, or which require an offender to demonstrate the lawful origin of the property alleged to be liable to confiscation, to the extent that such a requirement is consistent with the principles of their domestic law.

Measures to be taken by Financial Institutions and Non-Financial Businesses and Professions
to prevent Money Laundering and Terrorist Financing

Customer due diligence and record-keeping

Recommendation 4

Countries should ensure that financial institution secrecy laws do not inhibit implementation of the FATF Recommendations.

Recommendation 5

Financial institutions should not keep anonymous accounts or accounts in obviously fictitious names.

Financial institutions should undertake customer due diligence measures, including identifying and verifying the identity of their customers, when:

establishing business relations;

carrying out occasional transactions: (i) above the applicable designated threshold; or (ii) that are wire transfers in the circumstances covered by the Interpretative Note to Special Recommendation VII;

there is a suspicion of money laundering or terrorist financing; or

the financial institution has doubts about the veracity or adequacy of previously obtained customer identification data.

The customer due diligence (CDD) measures to be taken are as follows:

a) Identifying the customer and verifying that customer’s identity using reliable, independent source documents, data or information [4].

b) Identifying the beneficial owner, and taking reasonable measures to verify the identity of the beneficial owner such that the financial institution is satisfied that it knows who the beneficial owner is. For legal persons and arrangements this should include financial institutions taking reasonable measures to understand the ownership and control structure of the customer.

c) Obtaining information on the purpose and intended nature of the business relationship.

d) Conducting ongoing due diligence on the business relationship and scrutiny of transactions undertaken throughout the course of that relationship to ensure that the transactions being conducted are consistent with the institution’s knowledge of the customer, their business and risk profile, including, where necessary, the source of funds.

Financial institutions should apply each of the CDD measures under (a) to (d) above, but may determine the extent of such measures on a risk sensitive basis depending on the type of customer, business relationship or transaction. The measures that are taken should be consistent with any guidelines issued by competent authorities. For higher risk categories, financial institutions should perform enhanced due diligence. In certain circumstances, where there are low risks, countries may decide that financial institutions can apply reduced or simplified measures.

Financial institutions should verify the identity of the customer and beneficial owner before or during the course of establishing a business relationship or conducting transactions for occasional customers. Countries may permit financial institutions to complete the verification as soon as reasonably practicable following the establishment of the relationship, where the money laundering risks are effectively managed and where this is essential not to interrupt the normal conduct of business.

Where the financial institution is unable to comply with paragraphs (a) to (c) above, it should not open the account, commence business relations or perform the transaction; or should terminate the business relationship; and should consider making a suspicious transactions report in relation to the customer.

These requirements should apply to all new customers, though financial institutions should also apply this Recommendation to existing customers on the basis of materiality and risk, and should conduct due diligence on such existing relationships at appropriate times.

Footnotes:
[4] Reliable, independent source documents, data or information will hereafter be referred to as "identification data".

(See also Interpretative Notes Recommendation 5 
and Interpretative Note to Recommendations 5, 12 and 16)
Recommendation 6

Financial institutions should, in relation to politically exposed persons, in addition to performing normal due diligence measures:

a) Have appropriate risk management systems to determine whether the customer is a politically exposed person.

b) Obtain senior management approval for establishing business relationships with such customers.

c) Take reasonable measures to establish the source of wealth and source of funds.

d) Conduct enhanced ongoing monitoring of the business relationship.

(See also Interpretative Note to Recommendation 6)
Recommendation 7

Financial institutions should, in relation to cross-border correspondent banking and other similar relationships, in addition to performing normal due diligence measures:

a) Gather sufficient information about a respondent institution to understand fully the nature of the respondent’s business and to determine from publicly available information the reputation of the institution and the quality of supervision, including whether it has been subject to a money laundering or terrorist financing investigation or regulatory action.

b) Assess the respondent institution’s anti-money laundering and terrorist financing controls.

c) Obtain approval from senior management before establishing new correspondent relationships.

d) Document the respective responsibilities of each institution.

e) With respect to “payable-through accounts”, be satisfied that the respondent bank has verified the identity of and performed on-going due diligence on the customers having direct access to accounts of the correspondent and that it is able to provide relevant customer identification data upon request to the correspondent bank.

Recommendation 8

Financial institutions should pay special attention to any money laundering threats that may arise from new or developing technologies that might favour anonymity, and take measures, if needed, to prevent their use in money laundering schemes. In particular, financial institutions should have policies and procedures in place to address any specific risks associated with non-face to face business relationships or transactions.

Recommendation 9

Countries may permit financial institutions to rely on intermediaries or other third parties to perform elements (a) – (c) of the CDD process or to introduce business, provided that the criteria set out below are met. Where such reliance is permitted, the ultimate responsibility for customer identification and verification remains with the financial institution relying on the third party.

The criteria that should be met are as follows:

a) A financial institution relying upon a third party should immediately obtain the necessary information concerning elements (a) – (c) of the CDD process. Financial institutions should take adequate steps to satisfy themselves that copies of identification data and other relevant documentation relating to the CDD requirements will be made available from the third party upon request without delay.

b) The financial institution should satisfy itself that the third party is regulated and supervised for, and has measures in place to comply with CDD requirements in line with Recommendations 5 and 10.

It is left to each country to determine in which countries the third party that meets the conditions can be based, having regard to information available on countries that do not or do not adequately apply the FATF Recommendations.

(See also Interpretative Note to Recommendation 9)
Recommendation 10

Financial institutions should maintain, for at least five years, all necessary records on transactions, both domestic or international, to enable them to comply swiftly with information requests from the competent authorities. Such records must be sufficient to permit reconstruction of individual transactions (including the amounts and types of currency involved if any) so as to provide, if necessary, evidence for prosecution of criminal activity.

Financial institutions should keep records on the identification data obtained through the customer due diligence process (e.g. copies or records of official identification documents like passports, identity cards, driving licenses or similar documents), account files and business correspondence for at least five years after the business relationship is ended.

The identification data and transaction records should be available to domestic competent authorities upon appropriate authority.

(See also Interpretative Note to Recommendation 10)
Recommendation 11

Financial institutions should pay special attention to all complex, unusual large transactions, and all unusual patterns of transactions, which have no apparent economic or visible lawful purpose.  The background and purpose of such transactions should, as far as possible, be examined, the findings established in writing, and be available to help competent authorities and auditors.

(See also Interpretative Note to Recommendation 11)
Recommendation 12

The customer due diligence and record-keeping requirements set out in Recommendations 5, 6, and 8 to 11 apply to designated non-financial businesses and professions in the following situations:

a) Casinos – when customers engage in financial transactions equal to or above the applicable designated threshold.

b) Real estate agents - when they are involved in transactions for their client concerning the buying and selling of real estate.

c) Dealers in precious metals and dealers in precious stones - when they engage in any cash transaction with a customer equal to or above the applicable designated threshold.

d) Lawyers, notaries, other independent legal professionals and accountants when they prepare for or carry out transactions for their client concerning the following activities:

buying and selling of real estate;

managing of client money, securities or other assets;

management of bank, savings or securities accounts;

organisation of contributions for the creation, operation or management of companies;

creation, operation or management of legal persons or arrangements, and buying and selling of business entities.

e) Trust and company service providers when they prepare for or carry out transactions for a client concerning the activities listed in the definition in the Glossary.

(See also Interpretative Note to Recommendation 12
and Interpretative Note to Recommendations 5, 12 and 16)
Reporting of suspicious transactions and compliance

Recommendation 13

If a financial institution suspects or has reasonable grounds to suspect that funds are the proceeds of a criminal activity, or are related to terrorist financing, it should be required, directly by law or regulation, to report promptly its suspicions to the financial intelligence unit (FIU).

(See also Interpretative Note to Recommendation 13)
Recommendation 14

Financial institutions, their directors, officers and employees should be:

a) Protected by legal provisions from criminal and civil liability for breach of any restriction on disclosure of information imposed by contract or by any legislative, regulatory or administrative provision, if they report their suspicions in good faith to the FIU, even if they did not know precisely what the underlying criminal activity was, and regardless of whether illegal activity actually occurred.

b) Prohibited by law from disclosing the fact that a suspicious transaction report (STR) or related information is being reported to the FIU.

(See also Interpretative Note to Recommendation 14)
Recommendation 15

Financial institutions should develop programmes against money laundering and terrorist financing. These programmes should include:

a) The development of internal policies, procedures and controls, including appropriate compliance management arrangements, and adequate screening procedures to ensure high standards when hiring employees.

b) An ongoing employee training programme.

c) An audit function to test the system.

(See also Interpretative Note to Recommendation 15)
Recommendation 16

The requirements set out in Recommendations 13 to 15, and 21 apply to all designated non-financial businesses and professions, subject to the following qualifications:

a) Lawyers, notaries, other independent legal professionals and accountants should be required to report suspicious transactions when, on behalf of or for a client, they engage in a financial transaction in relation to the activities described in Recommendation 12(d). Countries are strongly encouraged to extend the reporting requirement to the rest of the professional activities of accountants, including auditing.

b) Dealers in precious metals and dealers in precious stones should be required to report suspicious transactions when they engage in any cash transaction with a customer equal to or above the applicable designated threshold.

c) Trust and company service providers should be required to report suspicious transactions for a client when, on behalf of or for a client, they engage in a transaction in relation to the activities referred to Recommendation 12(e).

Lawyers, notaries, other independent legal professionals, and accountants acting as independent legal professionals, are not required to report their suspicions if the relevant information was obtained in circumstances where they are subject to professional secrecy or legal professional privilege.

(See also Interpretative Notes to Recommendation 16 
and Interpretative Note to Recommendations 5, 12, and 16)
Other measures to deter money laundering and terrorist financing

Recommendation 17

Countries should ensure that effective, proportionate and dissuasive sanctions, whether criminal, civil or administrative, are available to deal with natural or legal persons covered by these Recommendations that fail to comply with anti-money laundering or terrorist financing requirements.

Recommendation 18

Countries should not approve the establishment or accept the continued operation of shell banks. Financial institutions should refuse to enter into, or continue, a correspondent banking relationship with shell banks. Financial institutions should also guard against establishing relations with respondent foreign financial institutions that permit their accounts to be used by shell banks.

Recommendation 19 (This Recommendation was revised and the following text was issued on 22 October 2004)

Countries should consider the feasibility and utility of a system where banks and other financial institutions and intermediaries would report all domestic and international currency transactions above a fixed amount, to a national central agency with a computerised data base, available to competent authorities for use in money laundering or terrorist financing cases, subject to strict safeguards to ensure proper use of the information.

(See Interpretative Note to Recommendation 19)
Recommendation 20

Countries should consider applying the FATF Recommendations to businesses and professions, other than designated non-financial businesses and professions, that pose a money laundering or terrorist financing risk.

Countries should further encourage the development of modern and secure techniques of money management that are less vulnerable to money laundering.

Measures to be taken with respect to countries that do not or insufficiently comply with the FATF Recommendations

Recommendation 21

Financial institutions should give special attention to business relationships and transactions with persons, including companies and financial institutions, from countries which do not or insufficiently apply the FATF Recommendations. Whenever these transactions have no apparent economic or visible lawful purpose, their background and purpose should, as far as possible, be examined, the findings established in writing, and be available to help competent authorities. Where such a country continues not to apply or insufficiently applies the FATF Recommendations, countries should be able to apply appropriate countermeasures.

Recommendation 22

Financial institutions should ensure that the principles applicable to financial institutions, which are mentioned above are also applied to branches and majority owned subsidiaries located abroad, especially in countries which do not or insufficiently apply the FATF Recommendations, to the extent that local applicable laws and regulations permit. When local applicable laws and regulations prohibit this implementation, competent authorities in the country of the parent institution should be informed by the financial institutions that they cannot apply the FATF Recommendations.

Regulation and supervision

Recommendation 23

Countries should ensure that financial institutions are subject to adequate regulation and supervision and are effectively implementing the FATF Recommendations. Competent authorities should take the necessary legal or regulatory measures to prevent criminals or their associates from holding or being the beneficial owner of a significant or controlling interest or holding a management function in a financial institution.

For financial institutions subject to the Core Principles, the regulatory and supervisory measures that apply for prudential purposes and which are also relevant to money laundering, should apply in a similar manner for anti-money laundering and terrorist financing purposes.

Other financial institutions should be licensed or registered and appropriately regulated, and subject to supervision or oversight for anti-money laundering purposes, having regard to the risk of money laundering or terrorist financing in that sector. At a minimum, businesses providing a service of money or value transfer, or of money or currency changing should be licensed or registered, and subject to effective systems for monitoring and ensuring compliance with national requirements to combat money laundering and terrorist financing.

(See also Interpretative Note to Recommendation 23)
Recommendation 24

Designated non-financial businesses and professions should be subject to regulatory and supervisory measures as set out below.

a) Casinos should be subject to a comprehensive regulatory and supervisory regime that ensures that they have effectively implemented the necessary anti-money laundering and terrorist-financing measures. At a minimum:

casinos should be licensed;

competent authorities should take the necessary legal or regulatory measures to prevent criminals or their associates from holding or being the beneficial owner of a significant or controlling interest, holding a management function in, or being an operator of a casino;

competent authorities should ensure that casinos are effectively supervised for compliance with requirements to combat money laundering and terrorist financing.

b) Countries should ensure that the other categories of designated non-financial businesses and professions are subject to effective systems for monitoring and ensuring their compliance with requirements to combat money laundering and terrorist financing. This should be performed on a risk-sensitive basis. This may be performed by a government authority or by an appropriate self-regulatory organisation, provided that such an organisation can ensure that its members comply with their obligations to combat money laundering and terrorist financing.

Recommendation 25

The competent authorities should establish guidelines, and provide feedback which will assist financial institutions and designated non-financial businesses and professions in applying national measures to combat money laundering and terrorist financing, and in particular, in detecting and reporting suspicious transactions.

(See also Interpretative Note to Recommendation 25)
Institutional and other measures necessary in systems for combating Money Laundering and Terrorist Financing

Competent authorities, their powers and resources

Recommendation 26

Countries should establish a FIU that serves as a national centre for the receiving (and, as permitted, requesting), analysis and dissemination of STR and other information regarding potential money laundering or terrorist financing. The FIU should have access, directly or indirectly, on a timely basis to the financial, administrative and law enforcement information that it requires to properly undertake its functions, including the analysis of STR. 

(See also Interpretative Note to Recommendation 26)
Recommendation 27

Countries should ensure that designated law enforcement authorities have responsibility for money laundering and terrorist financing investigations. Countries are encouraged to support and develop, as far as possible, special investigative techniques suitable for the investigation of money laundering, such as controlled delivery, undercover operations and other relevant techniques. Countries are also encouraged to use other effective mechanisms such as the use of permanent or temporary groups specialised in asset investigation, and co-operative investigations with appropriate competent authorities in other countries. 

(See also Interpretative Note to Recommendation 27)
Recommendation 28

When conducting investigations of money laundering and underlying predicate offences, competent authorities should be able to obtain documents and information for use in those investigations, and in prosecutions and related actions. This should include powers to use compulsory measures for the production of records held by financial institutions and other persons, for the search of persons and premises, and for the seizure and obtaining of evidence.

Recommendation 29

Supervisors should have adequate powers to monitor and ensure compliance by financial institutions with requirements to combat money laundering and terrorist financing, including the authority to conduct inspections.  They should be authorised to compel production of any information from financial institutions that is relevant to monitoring such compliance, and to impose adequate administrative sanctions for failure to comply with such requirements.

Recommendation 30

Countries should provide their competent authorities involved in combating money laundering and terrorist financing with adequate financial, human and technical resources.  Countries should have in place processes to ensure that the staff of those authorities are of high integrity.

Recommendation 31

Countries should ensure that policy makers, the FIU, law enforcement and supervisors have effective mechanisms in place which enable them to co-operate, and where appropriate co-ordinate domestically with each other concerning the development and implementation of policies and activities to combat money laundering and terrorist financing.  

Recommendation 32

Countries should ensure that their competent authorities can review the effectiveness of their systems to combat money laundering and terrorist financing systems by maintaining comprehensive statistics on matters relevant to the effectiveness and efficiency of such systems. This should include statistics on the STR received and disseminated; on money laundering and terrorist financing investigations, prosecutions and convictions; on property frozen, seized and confiscated; and on mutual legal assistance or other international requests for co-operation.

Transparency of legal persons and arrangements

Recommendation 33

Countries should take measures to prevent the unlawful use of legal persons by money launderers. Countries should ensure that there is adequate, accurate and timely information on the beneficial ownership and control of legal persons that can be obtained or accessed in a timely fashion by competent authorities. In particular, countries that have legal persons that are able to issue bearer shares should take appropriate measures to ensure that they are not misused for money laundering and be able to demonstrate the adequacy of those measures. Countries could consider measures to facilitate access to beneficial ownership and control information to financial institutions undertaking the requirements set out in Recommendation 5.

Recommendation 34

Countries should take measures to prevent the unlawful use of legal arrangements by money launderers. In particular, countries should ensure that there is adequate, accurate and timely information on express trusts, including information on the settlor, trustee and beneficiaries, that can be obtained or accessed in a timely fashion by competent authorities. Countries could consider measures to facilitate access to beneficial ownership and control information to financial institutions undertaking the requirements set out in Recommendation 5. 

International co-operation

Recommendation 35

Countries should take immediate steps to become party to and implement fully the Vienna Convention, the Palermo Convention, and the 1999 United Nations International Convention for the Suppression of the Financing of Terrorism. Countries are also encouraged to ratify and implement other relevant international conventions, such as the 1990 Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and the 2002 Inter-American Convention against Terrorism.

Mutual legal assistance and extradition

Recommendation 36

Countries should rapidly, constructively and effectively provide the widest possible range of mutual legal assistance in relation to money laundering and terrorist financing investigations, prosecutions, and related proceedings. In particular, countries should:

a) Not prohibit or place unreasonable or unduly restrictive conditions on the provision of mutual legal assistance.

b) Ensure that they have clear and efficient processes for the execution of mutual legal assistance requests.

c) Not refuse to execute a request for mutual legal assistance on the sole ground that the offence is also considered to involve fiscal matters.

d) Not refuse to execute a request for mutual legal assistance on the grounds that laws require financial institutions to maintain secrecy or confidentiality.

Countries should ensure that the powers of their competent authorities required under Recommendation 28 are also available for use in response to requests for mutual legal assistance, and if consistent with their domestic framework, in response to direct requests from foreign judicial or law enforcement authorities to domestic counterparts.

To avoid conflicts of jurisdiction, consideration should be given to devising and applying mechanisms for determining the best venue for prosecution of defendants in the interests of justice in cases that are subject to prosecution in more than one country.

Recommendation 37

Countries should, to the greatest extent possible, render mutual legal assistance notwithstanding the absence of dual criminality.

Where dual criminality is required for mutual legal assistance or extradition, that requirement should be deemed to be satisfied regardless of whether both countries place the offence within the same category of offence or denominate the offence by the same terminology, provided that both countries criminalise the conduct underlying the offence.

Recommendation 38

There should be authority to take expeditious action in response to requests by foreign countries to identify, freeze, seize and confiscate property laundered, proceeds from money laundering or predicate offences, instrumentalities used in or intended for use in the commission of these offences, or property of corresponding value. There should also be arrangements for co-ordinating seizure and confiscation proceedings, which may include the sharing of confiscated assets.

(See also Interpretative Note to Recommendation 38)
Recommendation 39

Countries should recognise money laundering as an extraditable offence. Each country should either extradite its own nationals, or where a country does not do so solely on the grounds of nationality, that country should, at the request of the country seeking extradition, submit the case without undue delay to its competent authorities for the purpose of prosecution of the offences set forth in the request. Those authorities should take their decision and conduct their proceedings in the same manner as in the case of any other offence of a serious nature under the domestic law of that country. The countries concerned should cooperate with each other, in particular on procedural and evidentiary aspects, to ensure the efficiency of such prosecutions.

Subject to their legal frameworks, countries may consider simplifying extradition by allowing direct transmission of extradition requests between appropriate ministries, extraditing persons based only on warrants of arrests or judgements, and/or introducing a simplified extradition of consenting persons who waive formal extradition proceedings.

Other forms of co-operation

Recommendation 40

Countries should ensure that their competent authorities provide the widest possible range of international co-operation to their foreign counterparts. There should be clear and effective gateways to facilitate the prompt and constructive exchange directly between counterparts, either spontaneously or upon request, of information relating to both money laundering and the underlying predicate offences. Exchanges should be permitted without unduly restrictive conditions. In particular:

a) Competent authorities should not refuse a request for assistance on the sole ground that the request is also considered to involve fiscal matters.

b) Countries should not invoke laws that require financial institutions to maintain secrecy or confidentiality as a ground for refusing to provide co-operation.

c) Competent authorities should be able to conduct inquiries; and where possible, investigations; on behalf of foreign counterparts.

Where the ability to obtain information sought by a foreign competent authority is not within the mandate of its counterpart, countries are also encouraged to permit a prompt and constructive exchange of information with non-counterparts. Co-operation with foreign authorities other than counterparts could occur directly or indirectly. When uncertain about the appropriate avenue to follow, competent authorities should first contact their foreign counterparts for assistance.

Countries should establish controls and safeguards to ensure that information exchanged by competent authorities is used only in an authorised manner, consistent with their obligations concerning privacy and data protection.

Address for enquiries:

David S. Gerber, Head of Financial Markets and Services, Federal Finance Administration (FFA), tel. 031 325 15 28
Rudolf Zurkinden, Financial Markets and Services, Federal Finance Administration (FFA), tel. 031 325 09 20

The Banking Act considers the banker's duty of confidence as a professional duty for which violation thereof must be punished by criminal law. Any banker who divulges banking secrets about his or her clients or third parties is punishable by imprisonment or fine.

Article 47 is the fundamental text of this law:

Article 47 of the Swiss Federal Banking Act of 8 November 1934

Any person who, in his or her capacity as member of a body, employee, proxy, liquidator or commissioner of a bank, observer for the Banking Commission, or a member of a body or an employee of an authorized auditing firm, has revealed a secret that was entrusted to him or her or of which he or she had knowledge by means of his or her practice or employment, any person who has incited another to violate professional secrecy, will be punished by imprisonment for a maximum of six months or by a fine not exceeding 50,000 francs.

If the offender acted in negligence, the punishment will consist of a fine not exceeding 30,000 francs.

Violation of secrecy remains punishable even when the practice or employment has terminated or the holder of the secret no longer works in the banking industry.

Reserved are the provisions of the federal and cantonal legislation ruling on the obligation to inform authorities and testify in court.

This law allows you - as a client - to obtain compliance with bank secrecy from your banker without having to plead a specific interest (unconditionally).

Article 47 of the Banking Act nevertheless provides for several exceptions to Swiss bank secrecy obliging the banker to inform authorities and testify in court. These exceptions are strictly regulated and defined within a legal framework. In civil cases, it applies to inheritance, divorce and debt collection and bankruptcy, whereas in criminal cases, it concerns legal proceedings with regard to money laundering.

Two articles of the Swiss criminal code regulate Swiss bank secrecy:

Article 162 takes punitive action against the disclosure of trade secrets or confidential business information.

Article 320 deals with occupational confidentiality.

Here is the text of the two articles:

Article 162 of the Swiss criminal code:

Any person who has divulged a trade secret or confidential business information that was meant to be kept by virtue of legal or contractual obligation, any person who has used this information to his or her benefit or to that of a third party, will be, on prosecution, punished by imprisonment or by fine.

Article 271 of the Swiss criminal code

Article 271 is aimed at foreign administrative officers (police, tax and customs authorities, etc.) who conduct investigations on Swiss territory. In such a way, it prevents abduction operations such as those carried out by the Nazi regime in the Jacob affair.

1. Any person who, without authorization, has conducted on Swiss territory for a foreign State acts that are a matter for public authorities, any person who has conducted such acts for a foreign party or another foreign organization, anyone who has furthered such acts, will be punished by imprisonment and, in serious cases, by reclusion.

2. Any person who, by means of violence, contrivance or threat, has taken a person abroad to hand him or her over to a government authority, a party or another foreign organization, or to place his or her life or soundness of body in danger, will be punished by reclusion.

3. Anyone who has prepared such an abduction will be punished by reclusion or imprisonment.

Below you will find a summary of the various legal texts that deal with Swiss bank secrecy.

List of the main federal laws

Labor Code (RS 220), Article 398

Swiss Criminal Code (RS 311.0), Articles 260; 305a; 305b

Federal Act on International Mutual Assistance in Criminal Matters (RS 351.1)

Federal Act on the Treaty with the United States of America on Mutual Legal Assistance in Criminal Matters (RS 351.93)

Federal Banking Act (RS 952.0), Article 47

Federal Act on Securities Exchanges and Securities Trading of 24 March 1995 (RS 954.1)

Federal Act on the Prevention of Money Laundering in the Financial Sector of 10 October 1997 (entered into effect on 1 April 1998; RS 955.0)

List of main international agreements ratified by Switzerland

European Convention on Mutual Assistance in Criminal Matters of 20 April 1959 (RS 0.351.1)

Convention of 8 November 1990 on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (RS 0.311.53)

International judicial cooperation treaties (RS 0.351 et seq.)

Other important references

Federal Banking Commission's policy on the prevention and fight against money laundering, reviewed in 1998 (Circular 98/1))

Agreement on the Swiss banks' code of conduct with regard to the exercise of due diligence of 1 July 1997, reviewed in 1998 (self-regulation by the Swiss Bankers Association)

40 Recommendations from the FATF (Financial Action Task Force on Money Laundering)

Article 273 of the Swiss criminal code

Article 273 of the Swiss criminal code holds for a prison sentence for foreign spies who try to obtain information about a client of a Swiss bank.

Even if the client authorizes the bank to give information to a foreign government, by law the bank cannot divulge any information. The purpose of this provision is to thwart any pressure or blackmail that foreign authorities could exert on a Swiss bank client so that he or she asks the bank to disclose the existence of the account in Switzerland (take, for example, the Nazi regime that used such practices on Jewish clients of Swiss banks).

Any person who has sought to discover a trade or business secret in order to make it accessible to an official or private foreign body, or to a private foreign company, or to their agents,
any person who has made a trade or business secret accessible to an official or private foreign body, or to a private foreign company, or to their agents,
will be punished by imprisonment or, in serious cases, by reclusion. The judge may also issue a fine.

Article 320 of the Swiss criminal code

1. Any person who has divulged a secret entrusted to him or her as a representative of authority or a civil servant, or who has acquired knowledge by means of his or her practice or employment, will be punished by imprisonment or by fine.
The disclosure remains punishable even when the practice or employment has terminated.

2. The disclosure will not be punishable if it was made with the written consent of a superior authority.