Statement from the SBA regarding the implementation of the extended due diligence requirements in tax matters and money laundering (adoption of the FATF guidelines)
27 February 2013
The Swiss Bankers Association (SBA) has long advocated a tax compliant financial centre. The SBA thus generally supports the approach taken by the Swiss Federal Council to embed both the extended due diligence requirements for financial intermediaries aimed at defending against untaxed assets, and the FATF predicate offences for money laundering (incl. tax offences) in the Anti Money Laundering Act (GwG).
Enhanced due diligence requirements in the area of taxation
- The SBA welcomes the embedding of the extended due diligence requirements into the Anti Money Laundering Act (GwG), as the preventative approach of the extended due diligence requirements in tax matters is taken into account. Furthermore, this ensures that all financial intermediaries in Switzerland must pursue tax compliancy for their clients.
- The SBA also welcomes the decision to implement the extended due diligence requirements by means of self-regulation according to the principle of a risk-based approach. Both instruments are proven and practicable. Furthermore, this ensures a swift process for future amendments should circumstances change.
- The SBA further welcomes the risk-based approach for tax compliance in the case of new assets. The bank can assume that the client is tax compliant – unless there are indications to the contrary. The SBA rejects a comprehensive audit of each client, as this places clients under general suspicion and is neither plausible, nor internationally accepted. No bank in the world can know all tax regimes and therefore guarantee the complete tax compliance of its clients.
- The SBA also strongly opposes a general duty to review existing business relationships. Existing clients should only be subject to an audit in suspicious cases relating to tax non-compliancy. The strategy of tax-compliant assets is forward-looking and should hinder the influx of untaxed new assets and should not be applied retroactively. Under no circumstances should it be extended to include the unilateral solution for the past.
- In this context, the mandatory termination of existing client relationships in the case of non-compliant conduct in tax matters for an existing client relationship should also be opposed. This because not all countries of domicile intend to provide their citizens with a means to achieve tax compliance. Such a drastic measure would leave Switzerland isolated internationally and could cause disadvantages in terms of reputation and competitiveness.
- The SBA welcomes the definition of qualified tax fraud as a new predicate offence to money laundering as this means that the gravity of the offence is taken into account.
- General malicious intent as a criterion for the offence of the qualified tax fraud should be rejected as unsuitable. The legal term malicious intent is a subjective characteristic with a broad scope for interpretation. Therefore, it is impossible for the banks to know the personal intentions of the client. The criteria for the offence must be objectively and outwardly ascertainable.
- The exact definition of the implementation regulation remains important.
The SBA will examine the draft legislation in closer detail and will provide further comment in the context of the consultation process.
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