Switzerland: Money‐Laundering Legislation and Asset Forfeiture
| Pages | 375-383 |
| DOI | https://doi.org/10.1108/eb027205 |
| Date | 01 February 1999 |
| Published date | 01 February 1999 |
| Author | Paul Gully‐Hart |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 2 No. 4
Switzerland: Money-Laundering Legislation and
Asset Forfeiture
Paul Gully-Hart
INTRODUCTION
Switzerland is a traditional financial centre with an
uninterrupted record of success so far. If the three
main banking centres of the country (Zurich,
Geneva and Lugano) were pooled, Switzerland
would appear as the third banking centre in the
world after New York and London. A few years
ago it was reckoned that between 5 and 8 per cent
of the total world volume of foreign exchange
transactions were handled by the Swiss financial
market, mostly through inter-bank transactions.
According to an estimation made in 1989 by the
Swiss Federal Customs Administration at the
request of an inter-ministry group of experts deal-
ing with money-laundering issues, it was reckoned
that approximately CHF135m (approximately
USS100m) poured into Switzerland every week.
This could explain why most discovered inter-
national laundering schemes involving Switzerland
have been connected with the physical import of
cash into the country.
For some years there has been a growing con-
cern that organised crime groups have been
actively seeking — as would the normal customer
— the well-known advantages of the Swiss bank-
ing system: the efficiency and high degree of
specialisation of the financial sector, reliability and
a long-standing tradition of discretion. Other
features have enhanced the power of attraction of
the Swiss financial market: for instance, Switzer-
land's firm resistance to cooperating with foreign
states in tax matters and the low level of tax on
investment business conducted in Switzerland.2
Switzerland's reputation as a possible sanctuary
for ill-gotten wealth was earned in the 1980s.
Some bank supervisory authorities had identified
Switzerland as an under-regulated offshore centre,
comparable to other fiscal paradises such as the
Channel Islands, Liechtenstein or Panama.
Over the last ten years, Switzerland has made a
determined effort to comply with the agenda of
the international community in curbing money
laundering. It has enacted and enforced legislative
policies designed to combat the use of the financial
system by money launderers. Preventive and
repressive measures have been tightened and are
currently undergoing further
changes.4
It is therefore timely to review Switzerland's
level of compliance with international regulations
and to consider domestic measures, followed by a
consideration of the most recent developments.
COMPLIANCE WITH INTERNATIONAL
INSTRUMENTS
The UN Drug Convention of 1988
The UN Drug Convention5 is the most compel-
ling evidence of the international community's
response to the perceived threat of drug trafficking.
The convention favours an integrated approach to
inter-state cooperation by using at least five
dif-
ferent techniques of international cooperation:
recognition of foreign penal judgments (including
orders of forfeiture or confiscation), the freezing
and seizure of assets, extradition, mutual legal
assistance and the transfer of criminal proceedings/
investigations to another member
state.6
Signatories to the convention are required to
make laundering a criminal and extraditable
offence. Domestic legislation should be introduced
to facilitate the identification, tracing, seizure and
forfeiture of drug proceeds and money laundering.
Contracting parties must cooperate in enhancing
law enforcement efforts to suppress drug traffick-
ing and related offences. Broader provisions have
been designed to eliminate national legislative
barriers, such as bank secrecy laws that tradition-
ally impede cooperation or joint investigations.
Signatory states are required to establish jurisdi-
cation over the offences contemplated by the
treaty and must be endowed with law enforce-
ment powers necessary to seize or confiscate all
forms of property used in or derived from the
relevant offences.
The convention is very specific in terms of
combating drug-related money laundering (Article
3).
Signatories are required to take appropriate
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