Euro Money Laundering Worries Force Germany And Switzerland Into Action

by Ulrika Lomas, Tax-News.com, Brussels

27 August 2001

In a concerted effort to prevent 'dirty' money from being smuggled into Switzerland, the German government has warned of delays at the border because it has decided to step up custom controls by performing more inspections and on-the-spot checks during the two-month changeover period from national currencies to euros.

In a statement released by the government, the German finance ministry said: 'According to police and customs information, large amounts of cash from criminal activities have been assembled across Europe.' And the government intends to embark upon 'comprehensive, strengthened cash checks by customs – in the run-up to the introduction of euro cash, and particularly during the main phase of the changeover in January and February 2002.'

According to Germany's customs authority, of the nearly 3,000 border checks linked to suspected money laundering, a third were on the German-Swiss border. A total of DM300 million in undeclared monies was discovered with around DM10 million considered to be related to money laundering.

The Swiss media says that although Switzerland shares Germany's money laundering worries, it has no intentions of stepping up its own border patrols. Hermann Kästli, from the Swiss Customs Office, told Swissinfo that suspected money laundering is only investigated in the banks and not so much at border crossings, 'in exceptional cases where customs officials come across large sums of money, they can call in the police to investigate the matter there and then,' Kästli said.

However, the Swiss government has announced that its beleaguered Money Laundering Control Authority (MLCA) will be revamped following recent blows to its reputation and efficacy. Director Niklaus Huber handed in his resignation earlier this year after bemoaning a lack of support from the Swiss finance ministry. His departure did not help to quash rumours, rife at the time, that the MLCA was under-staffed and under-funded.

And the MLCA branch which is the first port of call for the banking industry when reporting suspicious transactions, the Money Laundering Reporting Office (MLRO), has seen four employees resign in the past year including senior official, Daniel Thelesklaf, who declared that he had not been given the necessary authority to deal effectively with financial criminal activities.

The Swiss Finance Minister, Kaspar Villiger, confirmed last Friday that an overhaul of the MLCA will be overseen by Huber's replacement, Dina Balleyguier. Reforms include expanding staff numbers from 10 to 25 in September and the creation of four new sub-divisions within the authority to improve market surveillance.

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