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Swiss Finance Ministry To Bolster Anti-Money Laundering Office

Ulrika Lomas, Tax-news.com, Brussels

01 December 2000


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Switzerland is to beef up its anti-money laundering systems with a major overhaul of the Money Laundering Control Authority (MLCA). Beset by problems, most notably a number of high-level resignations in the last few months, changes are at last on the cards following a report by a consultant that concluded the MLCA is not sufficiently equipped to put Switzerland's money laundering legislation into practice.

Switzerland strengthened its anti-money laundering laws in 1998 in a bid to improve its image after allegations that the country was a favoured location for criminals to launder their ill-gotten gains. The MLCA has a tough job overseeing an estimated 8,000 financial intermediaries, so the Finance Ministry has decided to draft in additional personnel and has instructed the organisation to draft a code of ethics for self-regulation. The organisation was supposed to have made the 8,000 or so intermediaries either join a self-regulating organisation or put themselves under direct supervision by the unit. Some 5,000 have since joined one of the 12 self-regulating organizations, while 550 have applied for direct supervision.

Peter Siegenthaler, director of the Federal Finance Administration, said the government would take steps to help the MLCA cope with a huge backlog of cases by creating an extra two positions in addition to the existing eight. But the problem is that there are currently six positions vacant following an exodus of high-ranking officials, including Daniel Thelesklaf, who built up the office but resigned citing a lack of clear strategy by the Swiss government. Mr Siegenthaler said at a press conference in Bern: 'We have reason to criticize ourselves but not for self- accusations...we are to a certain extent pioneers.' A replacement for Mr Theslesklaf has at least been appointed and Judith Voney will head up the MLCA from February 1 2001. Moreover, a special task force is to be set up to help process cases over the next two years.

According to the authorities, the MLCA has faced immense difficulty because self-regulatory bodies have been unwilling to comply with the 1998 money laundering law, which extends controls from banks to the "para-banking" sector, which includes all organisations handling money, such as lawyers and trustees. Mr Siegenthaler is quoted in the Swiss press as saying: 'When the law was first made there was perhaps a misunderstanding of the complexity of the work to be done in the para-banking sector.' He said that an independent advisory body would help clarify any differences of interpretation.

Nonetheless, Mr Siegenthaler claims that Switzerland has much to be proud of: 'We are front-runners in anti-money laundering measures, ' he said, 'and when you are at the head of the course you can have more problems then when you are trailing behind.'

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