Switzerland: Legislation to Combat Money Laundering
| Date | 01 March 1998 |
| Published date | 01 March 1998 |
| DOI | https://doi.org/10.1108/eb027174 |
| Pages | 82-95 |
| Author | Riccardo Sansonetti |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control —
Vol.
2 No. 1
Switzerland: Legislation to Combat Money
Laundering
Riccardo Sansonetti
The Swiss legislative policy designed to combat the
use of the financial system for money laundering
has been progressively tightened over the last few
years.
It appears that since the 1980s all measures
taken were designed in order to have established a
consistent framework at the end of the process.
The legislative frame has been completed with a
key element through the adoption on 10th
October, 1997, by Parliament of
a
new Federal Act
on the prevention of money laundering in the
financial sector (Money Laundering Act (MLA)).
This new piece of legislation entered into force on
1st April, 1998.
The concept of the fight against money launder-
ing highlights the necessity to develop a combined
set of measures against a form of crime which is
typically international. In considering measures to
combat money laundering the meaning of an
international process must be examined. At
national level, Switzerland has experienced the
adoption of
a
series of penal provisions and admin-
istrative regulations as well as significant evolutions
in enforcement structures. The purpose of this
study is to provide an overview.1
CONCEPT OF THE FIGHT AGAINST
MONEY LAUNDERING
The laundering of money is a form of crime which
is typically international. The estimate of the scale
of money laundering transactions 'are almost
beyond imagination' according to the Managing
Director of the International Monetary Fund
(IMF):
the figure ranges between 2 and 5 per cent
of the global world GDP (which means an amount
totalling between US$600bn and US$l,500bn).2
Usually three phases are recognised in the money
laundering process, which is the processing of
criminal proceeds in order to disguise their illegal
origin:
— The placement stage, when the cash enters the
financial system by being paid into a bank or
used to buy currency, savings bonds or other
marketable securities.
— The layering stage, which is a way of hiding the
source of the money by operations of differing
degrees of complexity, for example by a series
of transfers to the accounts of front companies.
After a number of transactions, it is difficult to
see where the financial circuit actually began.
— The integration stage, during which the money
is absorbed into legal channels. The laundered
money is mixed with funds from lawful
sources.
Money to be laundered is easiest to trace when it
first enters the financial system. The simplest way
of combating it is to detect and, if possible, to stop
the money as it enters the system, independently
of how the perpetrators themselves are finally
punished. These primary thoughts explain why the
fight against money laundering requires basically
not only the laundering of all serious crimes to be
an offence, but also preventive measures in the
form of obligations of diligence to be placed on all
intermediaries. Of course, all these duties must be
enforced in the frame of an administrative super-
vision of the financial intermediaries as well as
through appropriate criminal police and justice
action when needed. As laundering of money is a
form of crime which develops nowadays typically
on a cross-border basis, the means of international
cooperation for the authorities in charge of fight-
ing in that area are essential.
INTERNATIONAL RESPONSES TO
MONEY LAUNDERING
The development of
a
set of comprehensive stand-
ards conceived in order to tackle all the aspects of
the fight against money laundering has been
realised in the first place through the Financial
Action Task Force (FATF) created in 1990. Many
other less comprehensive initiatives have preceded
and followed the creation of the FATF. The major
documents containing the result of international
discussions on improving methods to combat
money laundering have been produced within the
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