Swiss Bankers Seek Changes To New FATF Rules
Monday, July 8, 2013
While underlining its general support for the adoption and implementation of
the revised Financial Action Task Force (FATF) recommendations, the Swiss Bankers Association has
(SBA) nevertheless stressed the need for a number of amendments to be made to
the draft in order for the banks to be able to implement the provisions.
On February 16, 2012, the FATF approved a partial revision of its standards
on combating money laundering, terrorist financing and now also the financing
of the proliferation of weapons of mass destruction.
In accordance with the new standards, serious tax crimes will qualify as a
predicate offence for money laundering, the provisions on determining the beneficial
owner of legal entities and trusts will be clarified, and a risk-based approach
will be established as the most efficient instrument for combating financial
At the end of February, the Swiss Federal Council adopted a consultation bill
to allow the revised international recommendations to be implemented.
Notably, the bill introduces a disclosure obligation for holders of bearer and
registered shares in unlisted companies in order to enhance the transparency
of legal entities, and an extension of the due diligence requirement for establishing
the identity of beneficial owners. The draft legislation introduces a new predicate
offence to money laundering in the form of qualified tax fraud in the area of
direct taxation and extension of the existing predicate offence in the area
of indirect taxation. A serious tax offence is deemed to involve sums in excess of CHF600,000
Furthermore, purchases of real estate and movables may be paid for in cash
only up to a sum of CHF100,000 (USD107,572). It is mandatory for payments of
larger sums to be processed via a financial intermediary subject to the Anti-Money
Laundering Act. Finally, the effectiveness of the reporting system is to be
increased and the procedures for financial intermediaries will be simplified.
The SBA argues, however, that in addition to the threshold of a minimum CHF600,000,
multiple offences should be introduced as a further qualifying criterion. The
SBA says that it "emphatically rejects" the general intent to deceive
as a qualifying criterion for tax evasion, insisting that as this is a subjective
criterion with a broad scope for interpretation, it is impossible for the banks
to recognize the personal motives of a client. All criteria must therefore be
both "objectively and outwardly identifiable," the association argues.
Alluding to the fact that banks are now not only required to identify the beneficial
owner but also the shareholder, that is the holder of bearer shares or voting
rights that controls unlisted companies, the SBA emphasizes that it rejects
this measure, pointing out that "the identification process will result
in an excessive outlay for banks and financial intermediaries." The SBA
does, however, concede that it is important to find a solution with regards
to bearer shares in order for Switzerland to pass the OECD's Peer Review.
Concluding, the SBA underscores that it "categorically rejects the additional
duty to investigate and due diligence duties which arise from the financial
intermediaries through the mandatory processing of cash transactions of over
It insists: "This would in some instances give rise to the banks assuming
responsibility that should correctly lie with the parties involved in the transaction."