Ambassador's Implication In Money Laundering Probe Dents Swiss Reputation

by Ulrika Lomas, Tax-News.com, Brussels

15 July 2002

Reporting last week on the news that Switzerland's ambassador to Luxembourg, Peter Friederich has been arrested on suspicion of money laundering, the Swiss media expressed concern that the jurisdiction's image has been tainted again at exactly the wrong time.

Despite a recent tightening of Swiss anti-money laundering laws, and the country's attempts to compromise with the European Union over the long-running Savings Tax Directive dispute by offering to impose a withholding tax on the savings interest of non-residents, many Swiss newspapers last week felt that the ambassador's arrest would be interpreted by other countries as an indication that the country's banking secrecy regime fosters corruption, rather than as a sign that its anti-money laundering laws are working.

Der Bund, the Bern-based German language newspaper observed that: 'The fact that among the 400 members of the diplomatic corps there are also some black sheep is not the foreign ministry's mistake.'

However, it added that: 'Abroad, however, the arrest will be immediately linked to banking secrecy...The credibility of the cabinet in its negotiations with the EU is already damaged. As of [Monday], it has become more difficult to withstand the massive pressure from Brussels for changes to banking secrecy laws.'

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