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Switzerland Tweaks FATF Implementing Act

by Ulrika Lomas,, Brussels

11 September 2013

The Swiss Federal Council has taken note of the results of the consultation on the Federal Act for implementing the revised Financial Action Task Force (FATF) recommendations of 2012, providing notably that tax offences are considered predicate offences to money laundering, and has issued a series of proposed technical changes to the draft law accordingly.

The aim of the new Act is to enhance the fight against money laundering. The consultation revealed that the vast majority of participants welcomed the implementing draft and deemed it necessary in view of the development of international financial crime. Furthermore, stakeholders emphasized that the draft boosts the credibility, attractiveness, and stability of the financial center.

During the consultation, a number of modifications to the draft legislation were put forward. While adopting a whole series of technical changes proposed during the consultation, the Federal Council has nevertheless maintained its basic concept of February 27, 2013.

The Federal Council envisages the following changes:

  • Bearer shares: Supplementing the measures proposed on February 27, the Federal Council is examining the idea of introducing an alternative transparency measure in the event of dematerialised bearer shares being deposited with a third party, namely in the form of electronic registration. In contrast, it will not pursue the share immobilization model and physical deposit, given that its introduction at the present time would interfere with the revision of company law;
  • Tax offences as predicate offences to money laundering: In the area of direct taxes, the Federal Council is proposing to examine the idea of incorporating the predicate offence to money laundering in the Criminal Code rather than in the criminal law relating to tax offences. The proposal of February 27 is maintained for indirect taxes, however.
  • Reporting system in the event of suspicions: The Federal Council is maintaining its main proposal of using the deferred freezing of assets to improve the effectiveness of the reporting system in the event of suspicions. Regarding the duty to report, however, the Federal Council has taken on the consultation proposals of setting a deadline for the analyses of the Money Laundering Reporting Office Switzerland (MROS) in order to limit the burden for financial intermediaries when performing their duties. Moreover, the right to report is maintained, thereby preserving a tried and tested system.

The Swiss Federal Department of Finance is tasked with preparing a dispatch for the attention of parliament by the end of 2013. The dispatch will also contain the legislative changes needed to implement the revised FATF recommendations regarding the freezing of assets held by terrorists or terrorist organizations. With this amendment of the Anti-Money Laundering Act (AMLA), the current system is merely reorganized under a formal procedure that creates legal certainty for financial intermediaries and improves the implementation of the corresponding FATF recommendation.

TAGS: compliance | Finance | tax | tax compliance | tax avoidance | mining | law | legislation | Switzerland | Financial Action Task Force (FATF) | Tax

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