USA TODAY International Edition
Switzerland slow in combating money laundering
Despite scandals, new laws, some turn blind eye to rules
The FIFA corruption scandal is prompting fresh moves to stem money laundering in Switzerland, but the nation long known as a haven for hiding money may be slow to change.
The Swiss government announced new measures this month following the investigation of soccer’s governing body to tighten control over real estate transactions, the commodities industry, foundations and free ports — areas at high risk for laundering schemes that aren’t covered under current law.
Even with improved oversight, scrubbing the nation of all financial corruption is likely to prove difficult. “We still have a long way to go before we can control financial flows,” said Jean- Pierre Méan, president of the Swiss chapter of Transparency International.
As the U. S. and Swiss inquiry into corruption charges at FIFA continues, investigators here are looking into 53 counts of possible money laundering and 104 suspicious bank transactions linked to bidding contests for the 2018 and 2022 World Cup.
A law that goes into effect next year will allow top executives of sporting federations — like those arrested in the FIFA case — to be designated as “politically exposed persons,” subjecting them to greater financial scrutiny. FIFA and 60 other international sports organizations with headquarters in Switzerland are currently exempt from anti- corruption laws.
If experience is any indication, however, the changes may fall short because financial institutions here have been known to turn a blind eye to regulations. Even though Switzerland has had anti- money laundering legislation since 1997, tens of millions of dollars in illicit assets have trickled into Swiss banks in recent years.
An investigation this year into money laundering at an HSBC branch in Geneva revealed the bank knowingly broke the law and accepted illegal funds from arms dealers and blood diamond traders. Other recent moneylaundering cases include undeclared millions stashed in an account belonging to Luis Barcenas, a Spanish politician implicated in a corruption scandal, as well as money placed by Malaysian official Abdul Taib Mahmud, which authorities traced back to criminal activities.
“The banks can get away with being negligent and give in to business interests to the detriment of compliance,” Gretta Fenner, managing director of Switzerland’s Basel Institute for Governance, told Swiss Broadcasting Corp.
The government conceded in a June report that the country’s banks, which house around $ 2.1 trillion, or 34%, of offshore wealth, “are not immune to fraud, embezzlement, corruption” and other crimes mostly committed abroad.
“This is astonishing, because Switzerland has been struggling for years to get rid of the stigma as a money- laundering haven,” says Mark Pieth, an anti- corruption adviser to the World Bank and a criminal law professor at the University of Bern.
Fenner said the way to stave off money- laundering attempts is obvious: “We’ve got to start enforcing ( the laws) we have. I don’t think we are doing enough of that in Switzerland.”
“We’ve got to start enforcing ( the laws) we have” on money laundering. Gretta Fenner, managing director of Switzerland’s Basel Institute for Governance