A risk barometer for financial centres

Madeleine, the Swiss financial centre received an average rating in the last mutual evaluation in 2016. What challenges does it face this time around? 

The FATF’s last evaluation of Switzerland did indeed paint a mixed picture. It took a positive view of the amendments to the Anti-Money Laundering Act (AMLA) but noted that there were still some critical deficiencies, such as the lack of transparency regarding legal entities and the fact that the Act does not apply to certain advisory activities. These points are sure to be raised again in the next evaluation.

How should this assessment be viewed in an international context? 

Switzerland is on a similar level to other leading global financial centres. In some areas, however, such as the transparency of legal entities and subjecting advisors to the AMLA, it falls short of international standards.

Where does the current legislative project fit in with regard to the upcoming mutual evaluation? 

The plan to introduce a transparency register and place advisors under the AMLA will close what the FATF sees as significant gaps in Switzerland’s anti-money laundering framework. As Roman Studer explained in his Finews article, these changes in the law are an essential strategic step to preserve our financial centre’s international competitiveness. The FATF’s ratings serve as a risk barometer for financial centres.

Why does the FATF think it is important to place certain advisory activities under the AMLA? 

At the international level, some major data leaks have recently highlighted the often central role advisors play in setting up legal structures for the purposes of money laundering. The FATF believes that services provided by the legal professions have become a conduit to the banking industry and that it is therefore very important to regulate certain high-risk activities in order to prevent money laundering and terrorist financing.

Advisors have been an issue for some time now. Why is placing them under the Act such a challenge? 

The discussion on placing advisors under the AMLA reflects a fundamental conflict of interest. On the one hand, there is international pressure for greater transparency in the fight against money laundering. On the other, there are above all concerns about protecting professional confidentiality and about the practicability of regulatory requirements. This explains why there has been an especially heated debate on the subject for years. If subjecting advisors to the AMLA is to be a success, their essential demands must be taken seriously.

One final question: what form do you think the Act should ideally take?  

Performing well in the next mutual evaluation is important for the financial sector in terms of its reputation and competitiveness. It is therefore vital for the AMLA draft to take account of the FATF’s recommendations.

Thank you very much for your valuable insights, Madeleine.