Switzerland may have avoided the humiliation and dented reputations suffered by those countries named and shamed by the FATF, but its banking secrecy for which it is so revered (not by the the OECD and FATF, admittedly) means that the Alpine nation is constantly faced with money laundering allegations. Its situation is not helped by high-profile cases such as the Abacha scandal, in which authorities are investigating nearly US$500m deposited in 17 Swiss banks by the former Nigerian dictator.

Whilst money laundering legislation has been introduced in Switzerland, notably in 1998 since when the number of suspicious transactions reported has rocketed, this week saw the resignation of two top officials responsible for tracking money laundering activities on the grounds that the Swiss government lacks a comprehensive approach to tackle the problem.

Daniel Thelesklaf, head of the federal Money Laundering Reporting Office, had urged the government to approve the expansion of the two-year-old office, both in terms of power and personnel, but was turned down. Although Mr Thelesklaf has declined to comment on his resignation from the post he has held since February 1998, he did say in a speech last week that the government's policy towards curbing money laundering lacked "clear direction." His resignation was accompanied by that of his second in command, Mark Van Thiel.

A spokesperson for the federal police department said the resignations were a logical consequence of a disagreement over how best to tackle the fight against money laundering. The resignations are undoubtedly a blow to the counter-money laundering inititiative as the Money Laundering Reporting Office is the only office receiving information from financial intermediaries, which are largely unregulated asset managers. The office also helps in the co-ordination of information between cantons, which have individual responsibility for prosecuting those suspected of money laundering.

There are some observers who believe that federal and local money laundering efforts are being put under immense pressure by the Swiss banks, who make up the country's most important industry, to ease up on reform for fear of putting off potential clients. There is the feeling amongst some bankers that Switzerland's new openness is too intrusive in character.

The Swiss banking community may not be too happy with the fact that their country has become more open, but it is undeniable that Switzerland has been under intense pressure from the US and organisations such as the OECD to abandon banking secrecy which, according to them, attracts both money launderers and tax evaders like bees to a honeypot. The EU, moreover, is pressing Switzerland to agree to exchange information on nonresident savings accounts to prevent tax evasion.

In an effort to avoid any damage to its international image, Switzerland has made great efforts to root out those engaged in passing illegal money through the country's banking system, principally through legislation requiring banks and financial intermediaries to report suspicious transactions. Having succeeded in freezing around US$1bn in dubious money in 1999, Switzerland's efforts were recognised by the FATF in June when the country was excluded from the organisation's blacklist.

Nonetheless, new cases of suspect money continue to make the headlines, including funds linked to the Bank of New York, which is accused of laundering billions in Russian funds. The Abacha scandal has traversed most of the world's continents, it seems, and back again, and represents the largest discovery of suspicious deposits since details emerged more than a decade ago about the US$550m stashed away in Switzerland by former Philippines president Ferdinand Marcos.