Switzerland Proposes to Strengthen Anti-Money Laundering Laws

Published: 01 September 2023

Credit Suisse ZurichSwitzerland, which has shielded the wealth of the world’s criminals and corrupt, has now proposed to strengthen its anti-money laundering laws. (Photo: Wally Gobetz, Flickr, License)

By Henry Pope

The Swiss government stated its intentions Wednesday to strengthen its anti-money laundering laws, in a bill that, if passed, would bring its financial due diligence measures closer in line with international standards.

Switzerland’s seven-member Federal Council, among them Finance Minister Karin Keller-Sutter, proposed a series of reforms meant to restore the country's integrity as a global banking hub, which has suffered several black eyes over the years for keeping the ill-gotten gains of the world’s shadiest and most malicious characters.

The tell-all Suisse Secrets investigation, for instance, uncovered how one of the country’s former banking giants, Credit Suisse, opened its vaults to criminals and the corrupt, with no consideration given for who their clients hurt or stole from.

Such clients include Russian President Vladimir Putin’s close friends and network of oligarchs, whose money has managed to evade western sanctions and finance their leader’s year-and-a-half-long war of aggression against Ukraine.

One reform now on the table is the establishment of a federal register of beneficial owners, which would compel companies and trusts to disclose the real identities of their majority and minority owners.

Switzerland is among the last remaining European nations not to have a beneficial owner registry written into its financial transparency laws.

“Increased transparency should allow the prosecution authorities to identify who is really behind a legal structure with greater speed and certainty,” the Federal Council said in an official statement.

A second proposed measure is to pull back the curtain of privacy that insulates Swiss consultants, accountants, and lawyers from the country’s financial authorities. These services “carry an elevated risk of money laundering,” the government said, with legal services demonstrating a particular vulnerability to white collar crime activity.

Lastly, should the bill be signed into law, cash payments will lose a significant amount of the appeal they once held in laundering the world’s ill-gotten gains.

The threshold for cash payments linked to precious metals, for instance, will be lowered from CHF 100,000 (US$113,000) to CHF 15,000 ($17,000), should they wish to remain exempt from Swiss due diligence checks.

As for the real estate industry, all such payments would become subject to the country’s due diligence rules, irrespective of the monetary amount.

Switzerland’s proposed reforms come less than two months after the Helsinki Commission Hearing on Russian Sanctions and Money Laundering, which discussed how Russia has continued to evade sanctions thanks in large part to the Swiss banking industry.

One of the speakers was Bill Browder, CEO of Hermitage Capital Management and the man behind the creation of the Magnitsky Act, named in honor of his friend Sergei Magnitsky, who was killed by Russian authorities in 2009 for his attempts to expose corruption.

During the hearing, Browder raised the case of former Swiss financial officer Vinzenz Schnell, who torpedoed an investigation into exposing how roughly $20 million of Russian oligarch money had infiltrated the Swiss banking system. It was later revealed that he undermined the case in exchange for bribes and all-expense paid hunting trips.

One such oligarch who had bought Schnell’s fealty was Iskander Makhmudov, owner of multiple non-ferrous metal foundries and the former No. 205 on Forbes Billionaires List with a net worth of $9.6 billion, according to a report by the Commission on Security and Cooperation in Europe.

Schnell was ultimately fired and convicted on corruption charges. Despite this, Swiss federal authorities refused to reopen the investigation into how dirty Russian money had pervaded its banking system.

“In my opinion, what’s happening in Switzerland, this is just the tip of a much bigger iceberg.” Browder said before the Helsinki Commission. “The Swiss government wants to be seen to be doing something, but when it comes to reality, the Swiss government doesn’t want to do anything because there’s such a lot of money to be made off of dirty Russian money.”