Swiss Banking Sector Money Laundering Reports Hit New Record

by Ulrika Lomas, for LawAndTax-News.com, Brussels

18 April 2007

While the Swiss Money Laundering Reporting Office Switzerland (MROS) received fewer reports on suspicious transactions in 2006 than in the previous year, reports from the banking sector on suspicious financial transactions reached an all-time high last year.

With 619 reports on suspicious financial transactions submitted to MROS in 2006, the number of reports received decreased 15.1%, from 729 in the previous year, according to the 9th MROS Annual Report 2006, published on Tuesday. As in the past few years, this decrease was due to a steady decline in the number of reports from the payment transaction services sector and in particular from the money transmitters, culminating in a substantial drop of 52.9% in 2006.

The payment transaction services sector still accounted for a remarkably high share of 26.5% of the total reports in 2006. However, the quality of reports improved, a fact that translated into a higher percentage of reports forwarded to the prosecuting authorities for further handling (2006: 57%; 2005: 45%). Another result of the better-quality reports is that in 2006 a mere 15% of the cases forwarded were dismissed, as opposed to 34% in the year before.

While the number of reports from the money transfer sector dropped in 2006, the number of reports from the banking sector rose by a significant 22.5% to 359. This represents an all-time high in the number of reports submitted by the banking sector since the duty to report suspicious financial transactions became effective in 1998. Accounting for 58% of the total of reports in 2006, this sector filed the bulk of reports again for the first time in five years. This increase is largely due to Article 305 of the Swiss Criminal Code, providing for the right to report suspicious financial transactions without violating the business-client privilege. The compliance services and their efficient monitoring system that take a risk-oriented approach also account for this increase.

The aggregate assets involved in suspicious-transaction reports rose 19.7% from about CHF681 million (US$562 million) in 2005 to some CHF815 million in 2006. This increase, too, correlates to the increase in reports from the banking sector.

About 2% of the aggregate assets or 1.3% of the sum total of reports MROS received in 2006 involved reports filed in relation to suspected terrorism financing. The number of such reports declined from 20 in 2005 to 9 in 2006. Most of the reports were triggered by lists made available publicly with the names of terrorist suspects.

On the whole, suspicious-transaction reports received in 2006 were of considerably good quality, which translated into respectable 82% of reports passed on to the prosecution authorities for further investigation.

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