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Switzerland Targeted for Anti-Corruption Reforms

Joe Mont | September 3, 2014

When you think of hot spots for corruption, Switzerland may not be the first country that comes to mind. Nevertheless, Transparency International is singling out the Nordic nation as part of a new campaign, "Unmask the Corrupt,” and demanding that government officials must “make it harder for the corrupt to hide behind secret companies.”

Currently, Switzerland does not require beneficial owners of companies to be revealed, a level of secrecy that 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. The group is calling upon Switzerland to collect and disseminate ownership information to law enforcement. It recommends using public registers because banks would be required to consult this register when undertaking due diligence on their clients.

Transparency International has detailed a series of “urgent steps” it wants officials in Switzerland to consider. Among them:

Creating registers of beneficial ownership data and making them publically available. Bearer shares should either be abolished or shareholders should be required to register or deposit their shares with a financial intermediary.

Enhancing the transparency of legal entities, including non-listed stock companies issuing bearer shares. Whoever buys bearer shares of a non-listed public company should be required to identify themselves and report the purchase within one month. Trade registers should publicly disclose beneficial ownership.

Enacting a statutory reporting requirement to identify shareholders holding more than 25 per cent of shares or voting rights.

Placing limits on cash payments for real estate and luxury products. Real estate agents and luxury good sellers should be required to execute due diligence on their customers before selling to them. 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.

The campaign coincides with the parliamentary debate over a bill regarding the implementation of recommendations made by the Financial Action Task Force. The recommendations are currently recognized 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,” a statement from Transparency International says. The group adds that Switzerland must also restrict the size of cash payments when buying luxury goods as the ability to spend large amounts of cash without a regulated financial intermediary greatly increases the risk of money laundering.