Government proposes new financial watchdog

Parliament wants to keep a more watchful eye on the financial markets Keystone

The Swiss government wants to strengthen its surveillance of the financial markets by creating a new watchdog body.

Mooted for some time and presented to parliament on Wednesday, the body would be called the Federal Financial Market Supervisory Authority (Finma).

It would regroup three public entities: the Federal Banking Commission, the Federal Office of Private Insurance and the Money Laundering Control Authority.

The government said that the new watchdog authority would carry more weight internationally than the current three distinct entities.

And it hopes that Finma will help improve the image abroad of Switzerland as a financial centre.

Independent

The new body is planned to be independent in both its operations and finances, although it will answer to the government and be itself closely supervised.

Reorganisation of the organisations currently in existence is expected to improve the range of sanctions that could be taken, which are presently considered vague and insufficient.

The proposal’s presentation coincided with the publication of Transparency International’s – the anti-corruption non-governmental organisation – annual report.

This revealed there were shortcomings in plans to revise existing money laundering laws in Switzerland.

The report also pointed out that the number of money laundering cases reported to the Money Laundering Reporting Office was low compared with other major financial centres.

This, it said, suggested widespread non-compliance within Switzerland’s financial services sector, and the ultimate sanction of losing a licence to operate had never once been imposed.

More pressure

Transparency called for more pressure on financial intermediaries to report suspicious transactions, and to overcome their tendency to report cases by new customers, rather than existing ones.

It said that the House of Representatives “must be encouraged” to consider private corruption a crime.

If the current draft law is allowed to stand, some cases of money laundering would continue to be ignored due to the narrow categorisation of the crime under the Swiss penal code.

In May 2004 the Banking Commission had welcomed integrated financial market supervision at its annual news conference, calling it an “absolute necessity”.

It said the proposal to merge supervision of banks, stock exchanges, and investment funds with that of insurance companies under the umbrella of a single authority was an “entirely” sensible move that would bring “real benefits”.

swissinfo with agencies

In brief

Switzerland is a signatory of the Organisation for Economic Co-operation and Development’s (OECD) Financial Action Task Force, the main forum against criminal money flows.

Transparency International says that international cooperation has helped in Switzerland’s fight against money laundering, but the country’s financial authorities still have “some way to go”.

It recalled that a recent OECD report recommended Switzerland strengthen its money laundering surveillance, specifically calling for greater transparency, the independence of the financial intermediaries and a tighter deadline for reporting suspicious transactions.

Key facts

Swiss authorities say Switzerland has some of the most effective laws in the world against money laundering.
Switzerland introduced the criminal offence of money laundering in its penal code in 1990.
The Money Laundering Act of 1998 imposed a requirement for all financial intermediaries – not only banks – to report suspicious transactions.