Switzerland: Measures under Swiss Law to Combat Money Laundering
| Published date | 01 February 1996 |
| Pages | 389-399 |
| Date | 01 February 1996 |
| DOI | https://doi.org/10.1108/eb025744 |
| Author | Riccardo Sansonetti |
| Subject Matter | Accounting & finance |
Journal of Financial Crime — Vol. 3 No. 4 — International
INTERNATIONAL
Switzerland: Measures under Swiss Law to
Combat Money Laundering
Riccardo Sansonetti
Over the last few years, Swiss legislative policy
designed to combat the use of the financial system
for money laundering has been progressively tight-
ened. At a time when Swiss preventive measures
are undergoing further changes, it is important to
be aware of the various stages through which the
legislation has already passed. We should look at
the growth of international regulations, in which
the important part played by Switzerland should
not be forgotten.
The laundering of money obtained from crime
is not a strictly modern phenomenon, being only
one of many types of crime which generate large
profits, however, it is the increase in organised
crime since the war and then the growth in drug
trafficking and consumption which have generated
unprecedented amounts of money to be laun-
dered.1 This is a form of crime which is typically
international. Usually there are three phases in the
laundering process:2
(1) 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.
(2) The layering stage, which is a way of hiding
the source of the money by operations of
dif-
fering 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.
(3) The integration stage, during which the money
is absorbed into legal channels. The laundered
money is mixed with funds from lawful sour-
ces.
In considering legislation to combat money laun-
dering we must therefore look at what is both an
international phenomenon (see the section below)
and a process whereby legislation is replacing rules
on professional ethics. In the past, the code of
ethics on financial intermediaries appeared in pri-
vate texts (sec 'Private Regulations' below). When
a series of repressive measures (sec 'Criminal
Code' below) and administrative measures (see
'Measures under Administrative Law' below) were
adopted, at the same time we saw a trend in
organisation by the State (see 'Development of the
State Organisation' below). The purpose of this
study is to provide an overview.3
INTERNATIONAL RESPONSES TO
MONEY LAUNDERING
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 pun-
ished. This is why, in order to avoid the injection
of illicit capital into the financial sector, there has
been a tendency on the international level to focus
not only on the development of international
cooperation but also on the obligations placed on
financial intermediaries.
About ten years ago, the communication of
information through the courts and the extradition
of criminals could take place within the framework
of existing traditional bilateral and multilateral
conventions on judicial cooperation.4 However, the
laundering had to be dealt with by the courts in
the same way in all the countries and this was not
being done.5
The problem of money laundering came to be
specifically discussed at the same time within
Interpol, the Customs Mutual Assistance Group,
the Customs Cooperation Council, the Trevi
Group of Ministers of the European Union
responsible for security problems, and within the
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