Wed | Aug 23, 2017

Swiss watchdog: Probes of money laundering jump in 2016

Published:Wednesday | April 12, 2017 | 4:00 AM

Switzerland's financial markets watchdog says it investigated 22 breaches of money laundering requirements last year, from nine in 2015, as the Alpine country seeks to combat the growing risk of corruption linked to assets from around the world.

The authority, FINMA, said "serious shortcomings" came to light in 2016, including major cases involving the Malaysian sovereign wealth fund 1MDB, and Brazilian oil company Petrobras. At year end, FINMA had classified 21 unspecified banks as "high risk" meaning their activities are under enhanced surveillance.

"Over the past four years, FINMA has taken enforcement action against supervised institutions in about 40 cases for breaches of anti-money laundering regulations, but the scale of the recent misconduct is unprecedented," FINMA said in a statement with the release of its annual report last week.

"Several Swiss financial institutions have been caught up in major international corruption cases, not least those involving the Malaysian sovereign wealth fund 1MDB and Brazilian oil company Petrobras," it said.

UNCERTAIN ORIGINS

Marc Branson, the FINMA chief executive, said the risk of money laundering in Switzerland the world's top hub for wealth management has increased in the last couple of years as bank clients increasingly come from around the world and bring more assets from developing markets with uncertain origins.

"Therefore, the source of their wealth is harder to determine and their transactions are perhaps harder to understand," Branson told The Associated Press at a news conference in the Swiss capital. He said some banks had not strengthened their "control processes.

"The warning signals were there, but were not acted on," he said, alluding to cases of banks that violated the anti-money laundering requirements. "That's where we step in and say: 'That goes over the line and that, we cannot accept.'"

FINMA has close three cases linked to banks with ties to 1MDB, involving Falcon Bank, Coutts and BSI, and is investigating four others. The only one of those four to be identified is linked to UBS, after Singaporean authorities announced their own probe of the Swiss banking heavyweight in October, authority spokesman Vinzenz Mathys said.

FINMA later issued a correction, with Mathys saying the case had been closed in the last few days, with UBS receiving a reprimand for not adequately clarifying a number of transactions but that no "systematic" issues were found.

FINMA Chairman Thomas Bauer also said that the authority was not contacted by investigators behind a Dutch-led probes announced last weeks of suspected money laundering and tax evasion linked to Credit Suisse. He said judicial and tax authorities, not financial authorities, were in charge.