Switzerland Weighs New Money-Laundering Rules Amid US Criticism

Switzerland proposed new rules to toughen anti-money laundering laws as US officials ramp up their critique of what they say is weak sanctions enforcement.

(Bloomberg) — Switzerland proposed new rules to toughen anti-money laundering laws as US officials ramp up their critique of what they say is weak sanctions enforcement.

A plan announced Wednesday includes a federal register where companies and other legal entities would have to add the names of their beneficial owners, making it harder for criminals and others to hide assets from police and tax authorities. The register, however, won’t be public.

The proposals come amid growing criticism from the US that Switzerland hasn’t been doing enough to crack down on the movement of dirty money. 

In recent years, Switzerland has been forced to shift away from traditions that protected banking secrecy and made it one of the go-to destinations for the world’s rich. Still, critics say that too little has been done and are frustrated at what they see as its patchy enforcement of sanctions after Russia’s invasion of Ukraine. It’s also been unwilling to join a multilateral taskforce designed to improve cooperation on seizing sanctioned Russian assets.

In its statement, the Swiss government said “increased transparency should allow the prosecution authorities to identify who is really behind a legal structure with greater speed and certainty.”

But a US State Department official told Bloomberg this week that more needs to be done by the Switzerland. The goal is to starve Russian President Vladimir Putin of the ability to move money around for oligarchs and other proxies, the official said.

The main features of the proposed bill:

  • introduction of a federal register to which companies and other legal entities would have to add the names of their beneficial owners. The private registry would be managed by the federal police and be regularly audited by the federal finance department.
  • anti-money laundering rules would apply to consulting activities, especially legal advice
  • measures to prevent sanctions under embargo legislation being “breached or circumvented.”
  • the threshold for cash payments in precious metal trading would be cut from 100,000 Swiss francs ($114,00) to 15,000 francs.

The risk to the proposal is that they get watered down during what’s likely to be lengthy political negotiations. Many Swiss lawmakers have been reluctant in the past to enact tougher restrictions on attorney-client privileges because they are lawyers themselves, said the US official. 

A meaningful beneficial ownership registry would compel attorneys to be more forthcoming in reporting suspicious activity, the official said. 

Campaign group Transparency International said the draft bill is welcome but needs improvement. Access to the registry should not be restricted but open to journalists and NGOs. Companies should also have access to do checks of business partners, it said. 

The group added that the act should be extended to include activities such as transactions involving art or luxury goods.  

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