The fight against money laundering

The fight against money laundering

Switzerland has strict rules aimed to prevent money laundering and terrorist financing. It implements the Financial Action Task Force’s international standards.

Switzerland has strict regulation in place to prevent money laundering and terrorist financing. It implements the international standards of the Financial Action Task Force (FATF), an international body of experts whose Secretariat is housed at the OECD. The FATF defines standards relating to money laundering that are applicable worldwide.

Switzerland was one of the first countries to introduce measures against money laundering. With the Agreement on the Swiss banks’ code of conduct with regard to the exercise of due diligence (CDB) introduced in 1977, Switzerland became a pioneer in identifying contracting parties and determining the identity of beneficial owners. The CDB is one of the main pillars in the fight against money laundering. It is revised periodically and exists in its current version as CDB 20.  

Switzerland’s mechanisms for combating money laundering have expanded steadily ever since and in addition to the provisions contained in the Swiss Criminal Code (Art. 305 bis and 305 ter SCC), today also comprise the Federal Act on Combating Money Laundering and Terrorist Financing (AMLA) and a corresponding ordinance of the Swiss Financial Market Supervisory Authority (FINMA) on the prevention of money laundering and terrorist financing (FINMA Anti-Money Laundering Ordinance, AMLO-FINMA), as well as the CDB mentioned previously. Through these measures, the FATF’s recommendations are met to the greatest possible extent.

Self-regulation of the banks

The CDB, which is enacted by the SBA as self-regulation in the form of a code of conduct and is generally revised and updated every five years, has defined the duties of the banks for identifying the contracting party and determining the identity of the controlling person or the beneficial owner since 1977. Further to this, it prohibits active assistance in the flight of capital and tax evasion.

Statutory bank auditors are mandated by the banks and FINMA to monitor the banks’ compliance with the agreement. Special investigators and a CDB supervisory board assess breaches of the agreement. In the event of a breach of the code of conduct, a fine of up to CHF 10 million can be imposed on the bank in question, which is then used for non-profit purposes by the SBA.