Friday, April 10, 2009

Money laundering

What does money laundering mean?

Money Laundering is the term applied to the act of concealing the origins of money earned through criminal activities and of releasing it unnoticed into legitimate business activities. Money laundering is most commonly associated with drug trafficking. However, any number of criminal activities may give rise to money laundering, e.g. embezzlement, corruption, blackmail, trafficking in people, to name just a few.

What does Switzerland do against money laundering?

Switzerland has set up what is probably the world’s most comprehensive and effective mechanism for dealing with money from criminal sources. The Swiss Money Laundering Act (in force since 1998) obliges all financial intermediaries (not only banks) to identify all clients and to establish the beneficial owners of the assets ("know your customer"). Furthermore, they must report any justified suspicion of money laundering to the authorities and freeze the suspicious assets. Finally, for more than 20 years now, banks in Switzerland have observed a "Due Diligence Agreement" which contains the "know your customer" rules. The Due Diligence Agreement was a key point of reference when the Money Laundering Law was being drawn up.
Further rules and regulations against money laundering are laid down in the Swiss Criminal Code and the Swiss Financial Market Supervisory Authority FINMA guidelines of 26 March 1998. Moreover, the two major Swiss banks, together with nine other international banks, have committed themselves to applying global due diligence standards within the framework of the "Wolfsberg Anti-Money Laundering Principles".

Why is it that time and time again, money from dictators appear in Switzerland? Does Switzerland need this sort of money?

Switzerland is the global leader in cross-border asset management. The statistical probability of a dictator or despot bringing his money into Switzerland is therefore relatively high. But Switzerland doesn’t want this money! The damage to our image caused by such incidences is much greater than the value of the customer relationship - not just for the Swiss financial center but also for the institution involved. Thus Switzerland is the only country in the world to have drawn up and implemented a detailed set of rules covering the treatment of assets belonging to politically-exposed individuals. These regulations have been described as exemplary by the USA and other countries.
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Swiss Bankers Association

The trade association known as the Swiss Bankers Association was founded in 1912 in Basel, Switzerland. It is the primary industry group representing the Swiss Banks to the government of Switzerland and to the governments of other states. The unity provided by this organization allows the various Swiss Banks, from the "Big Two" (UBS AG and Credit Suisse) down to the smaller community and cantonal banks, to collaborate on various issues of importance to the banking community.
Firstly, the banks engage in a form of self-regulation, in conjunction with the Swiss Federal Banking Commission. Under this system, the banks draw up a code of conduct in partnership with the SFBC, which is then enforced through the oversight of the SFBC.
Secondly, the banks maintain more security, both for their clients and for the world, by working together. They can more adequately protect clients identity, while they can also collaborate to aid the Swiss government in freezing the funds of criminals being investigated under the 1983 Federal Law relating to International Mutual Assistance in Criminal Matters.
Finally, like any trade organization, the Swiss Bankers Association promotes the image of the Swiss Banks, and of Switzerland as the world's banking capital.
The organization today has almost 784 institutional members (banking, securities, and auditing institutions) and approximately 10,509 individual members (high-ranking officials within the institutional members). The chief executive officer of the organization is Urs P. Roth, with Pierre Mirabaud as Chairman of the Board.
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