Switzerland must make it much harder for the corrupt to hide behind secret companies if the country wants to keep criminal activity out of its financial system, Transparency International Switzerland said today as it launched the "Unmask the Corrupt" campaign in Switzerland.
Currently, Switzerland does not require the identity of the real, living people who ultimately own, control or benefit from a company. This secrecy makes it easier for corrupt foreign public officials and businesspeople to hide the origin of their stolen money from law enforcement, the public and governments who may seek its return. Transparency International believes that Switzerland must collect this information, and make it accessible to law enforcement. Public registers are the best way to do this not least since banks would be required to consult this register when undertaking due diligence on their clients.
“Switzerland needs to extend the scope of its anti-money laundering legislation in order to prevent the corrupt from hiding the proceeds of crime and corruption on its soil. No longer should the corrupt be able to get away with illicit activities, often linked to international organised crime, with the help of Switzerland,” said Eric Martin, Chair of Transparency International Switzerland.
Transparency International Switzerland’s efforts to unmask the corrupt and throw light on company ownership is part of a broader Transparency International campaign that calls on governments worldwide to halt illicit financial flows stolen through the abuse of power, bribery and secret deals.
“For too long, the corrupt have been allowed to hide their ill-gotten gains in foreign countries. This has to stop now in the interest of all countries and their citizens,” warned Cobus de Swardt, Transparency International’s Managing Director.
In Switzerland, the campaign coincides with the parliamentary debate over a bill regarding the implementation of recommendations made by the Financial Action Task Force (FATF).
The recommendations are currently recognised as the international standard for combating money laundering. The Swiss Parliament should not attempt to dilute the current Federal Bill and should also work towards measures to ensure the effectiveness of essential legislation such as a better protection for whistleblowers and a reinforcement of the Swiss penal code for cases of private corruption.
To stop the corrupt from enjoying their ill-gotten gains, Switzerland must also restrict the size of cash payments when buying luxury goods. The ability to spend large amounts of cash without a regulated financial intermediary greatly increases the risk of money laundering.
Time for Switzerland to act
To make significant progress in unmasking the corrupt, Transparency International Switzerland calls for urgent steps to be taken in the following areas:
• Registers of beneficial ownership need to be created and made public. Bearer shares should either be abolished or shareholders should be required to register or deposit their shares with a financial intermediary.
More concretely, Transparency International Switzerland states that the transparency of legal entities, including for non-listed stock companies issuing bearer shares, needs to be enhanced. It should be clear who the beneficial owners behind the legal entities are. Whoever buys bearer shares of a non-listed public company should be required to identify him- or herself and report the purchase within one month. Trade registers must publicly disclose beneficial ownership. Transparency International Switzerland also calls for the introduction of a statutory reporting requirement to identify shareholders holding more than 25 per cent of shares or voting rights.
• There should also be a limit for cash payments for real estate and luxury products. In the case of cash payments, real estate agents and luxury good sellers should be required to execute due diligence on their customers before selling them property or goods.
It is well known that cash payments are frequently used for money laundering and play an important role in cross-border crime. Therefore, Transparency International Switzerland is calling for a legal limitation of the sums that can be paid in cash. Payments for real estate or luxury goods exceeding 100,000 francs should be settled through a financial intermediary subject to the Swiss Anti-Money Laundering Provisions.
“Switzerland needs to take responsibility and toughen its anti-money laundering legislation. The world’s financial architecture needs to be made more transparent and offshore financial centres should not allow corporate vehicles to be misused by criminals to hide their identity and stolen wealth behind secret corporate structures while enjoying a life of luxury with impunity paid from taxpayers’ money,” said Martin.
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