The function of self‐regulating organisations in the Swiss money laundering control scheme
| Published date | 01 January 2004 |
| Date | 01 January 2004 |
| DOI | https://doi.org/10.1108/13685200410809788 |
| Pages | 69-74 |
| Author | Luka Müller‐Studer |
| Subject Matter | Accounting & finance |
The Function of Self-Regulating Organisations in the
Swiss Money Laundering Control Scheme
Luka Mu
Èller-Studer
This paper concerns the function of the two types of
self-regulating organisations (SROs), types A and B,
in implementing the Federal Statute Concerning the
Combat of Money Laundering in the Financial
Sector (Money Laundering Statute, or MLS) (see
Figure 1).
1
In Switzerland the implementation and enforce-
ment of the duties of diligence contained in the
MLS is primarily based on the principle of self-
regulation, as stated in a Message by the Swiss Federal
Council to Parliament (hereinafter the Message).
2
Individuals or corporate bodies who qualify as ®nan-
cial intermediaries (FIs) pursuant to Article 2 paras 2
and 3 of the MLS can form SROs.
3
These organi-
sations
4
specify within the framework of the MLS
the duties of diligence for its members (FIs).
5
For
FIs pursuant to Article 2 para. 3 MLS (the so-
called `para-banking' sector), an SRO is even the
direct and ®nal supervision and control body (SRO
type A).
The second category of FI is to be found in Article
2 para. 2 MLS. Insurance companies, banks, casinos
etc fall under this category.
6
For these FIs, the
direct supervision remains with their respective
Federal Supervisory Bodies. The function of an
SRO formed by these FIs (SRO Type B) is Ð
depending on the respective Federal Authority's
policy Ð dierent.
7
LEGAL AND FACTUAL BACKGROUND
Legal basis in the MLS for SRO types A
and B
The MLS dedicates only a brief section (s. 5) to SRO
type A, which contains very general descriptions of
its obligations.
8
According to Article 24 MLS, an
SRO is obliged: (1) to set-up regulations (SRO
regulations); (2) to supervise and control the com-
pliance of its aliated FI with its duties;
9
and (3)
to ensure that the persons entrusted with controls
ful®ls the necessary requirements for a sucient
examination/inspection(know-how,
10
organisation,
11
independence
12
).
In Article 25 MLS the minimal content of the
SRO regulation is further speci®ed. According to
the Message, the SRO regulation plays the central
role in de®ning the speci®c duties of diligence to be
applied by the FI in each dierent sector.
13
It is the
essential instrument to supervise the FI. It gives the
MLS `police framework law'
14
the necessary clarity.
Hence, together with the basic provisions in the
MLS,
15
the SRO regulation establishes the concrete
standard of diligence to be executed by the FI in
the respective sector in which the speci®c SRO
regulation applies.
16
Besides determining the duties of diligence for
FIs,
17
the SRO Regulations have to lay down proce-
dures for aliation, expulsion, supervision and con-
trol as well as sanctions.
18
The SRO regulations
and any modi®cations thereof have to be approved
by the Control Oce.
19
The Control Oce exam-
ines the legality and adequacy of the SRO regula-
tions.
20
In approving the SRO regulation the
Control Oce ensures that each SRO establishes a
comparable standard of diligence.
21
Further, the
SRO is required to inform and notify to the Control
Oce
22
and to submit to the Control Oce on a
regular basis a list of its aliated FIs.
23
The MLS does not contain any requirements
concerning the legal structure of an SRO. The
Message mentions only the possibility of adopting
already existing organisational structures, such as
professional associations, without further considering
the question of legal structure.
24
In the author's opinion the structure of a private-
law legal person, in particular such as that of an asso-
ciation according to Article 60 . Swiss Civil Code, is
sucient to meet the requirements for an SRO as laid
down in the MLS.
25
Although the principle of self-regulation and the
general description of the tasks of the SRO in the
MLS indicate a certain discretion in determining
the duties of diligence and in organising the enforce-
ment of the due diligence duties, self-regulation
should not be overrated. The requirements for an
appropriate and standardised enforcement of the
duties of diligence on the one hand and the obligation
Page 69
Journal of Money Laundering Control Ð Vol. 7 No. 1
Journalof Money Laundering Control
Vol.7, No. 1, 2003, pp. 69± 74
#HenryStewart Publications
ISSN1368-5201
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