Illicit financial flows

How Switzerland supports the fight against financial crime, corruption, tax evasion and over-indebtedness, and furthers the recovery of assets

  • The Swiss financial centre is one of the world's most important and has a strong international focus.

  • As with all financial centres, there is a risk of abuse. Switzerland has taken many steps to mitigate this risk as far as possible.

  • Switzerland acknowledges the problem of illicit financial flows and has committed to internationally established standards to combat financial crime, tax evasion, money laundering and corruption.

  • In recent years, Switzerland has made a substantial contribution to the development of international standards, which it then transposes into national law and enforces effectively.

  • As part of its development cooperation, Switzerland has long supported programmes in developing countries to strengthen the institutions that counter illicit financial flows.

o   Automatic exchange of financial account information (AEOI)

Switzerland has participated in the AEOI mechanism since 2017 and has signed AEOI agreements with around 100 partner states, including emerging and developing countries. In principle, Switzerland applies AEOI with all states and territories which meet the requirements of the OECD standard (particularly regarding the legal basis required for implementation, as well as confidentiality and data security) and which have expressed an interest in implementing AEOI with Switzerland.
In 2019, Switzerland transmitted data on some 3.1 million financial accounts to partner states.

o   Administrative assistance

Within the framework of mutual administrative assistance in tax matters, tax authorities provide tax-related information in accordance with the international standard. Switzerland's network for requesting mutual administrative assistance in tax matters currently comprises 141 states. From 2015 to 2018, Switzerland responded to over 3,000 requests (more than almost any other country). In March 2020, the Global Forum on Transparency and Exchange of Information for Tax Purposes rated Switzerland's implementation of international administrative assistance in tax matters as "largely compliant".

o   Legal assistance

Within the framework of international mutual legal assistance, the Swiss judicial authorities cooperate with their counterparts abroad in cases of cross-border crime. This has included some large-scale cases such as Petrobras (Brazil) and 1MDB (Malaysia). From 2014 to 2018, Switzerland received more than 10,000 requests for mutual legal assistance from abroad.

o   Prevention of base erosion and profit shifting by companies (BEPS)

Switzerland exchanges country-by-country reports in implementation of the OECD minimum standard to prevent base erosion and profit shifting. The BEPS standard requires all large multinational enterprises to report on the global distribution of their revenues and taxes paid. Switzerland currently exchanges such information with the tax authorities of over 50 partner states, including emerging economies, and is open to extending this in the future to all countries that comply with the international standards. The information in the country-by-country reports is used for risk assessment by tax authorities and is not intended for public disclosure.

o   Anti-money laundering/countering the financing of terrorism (AML/CFT)

Switzerland has adapted its AML/CFT legislation several times in recent years in compliance with international standards. The global coordinating body (FATF) has consistently found that Switzerland's structures are generally sound and effective. In the past several years, Switzerland has strengthened its preventive legal framework, especially in relation to politically exposed persons (PEPs), and has improved the transparency of beneficial owners (e.g. by abolishing anonymous bearer shares) and added tax fraud as a predicate offence. In 2018, the Money Laundering Reporting Office Switzerland (MROS) received over 6,000 suspicious activity reports. This was twice as many as in 2016, testifying to the high level of awareness in the financial sector. Within the framework of international development cooperation, Switzerland also supports various global initiatives to strengthen AML/CFT capacity in recipient countries.

o   Extractive sector

Switzerland supports the Extractive Industries Transparency Initiative (EITI) through funding and representation on the EITI Board. The revised Swiss company law will introduce new disclosure requirements for commodity firms. Companies operating in the extractive sector will be required to disclose payments of CHF 100,000 or more made to government agencies. In its 2018 report on the extractive sector, the Federal Council reaffirmed Switzerland's commitment, particularly through cooperation programmes with developing and Eastern European countries that have an extractive industry and in relation to AML/CFT efforts.

o   Asset recovery

If – despite the comprehensive preventive measures in place – assets originating from offences listed in the United Nations Convention against Corruption (corruption, money laundering, etc.) enter the Swiss financial sector, Switzerland is prepared to provide assistance, within the framework of mutual legal assistance in criminal matters, to freeze these assets with a view to their confiscation and, where appropriate, their return. Switzerland has acquired considerable experience and achieved concrete results in the area of asset return. Over the past thirty years, Switzerland has returned more than USD 2 billion to the benefit of affected populations in countries such as Nigeria, the Philippines, Peru, Angola and Kazakhstan. Its pioneering role in this field is internationally recognised. This restitution mechanism is an important pillar of Swiss anti-corruption policy.

Further information can be found on the website of the Federal Department of Foreign Affairs (FDFA), see link.

o   Anti-corruption

Switzerland is an active member of several international anti-corruption mechanisms, such as the G20 anti-corruption working group, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the Criminal Law Convention on Corruption of the Council of Europe, and the United Nations Convention against Corruption. Switzerland also engages in anti-corruption dialogue with international sports federations. In its development cooperation, Switzerland contributes to strengthening anti-corruption and financial supervisory authorities and the International Organization of Supreme Audit Institutions (INTOSAI). Furthermore, close cooperation with foreign investigative agencies and the analysis of suspicious activity reports by Switzerland's financial intelligence unit (MROS) have helped in the detection of several international corruption cases.

o   Institutional strengthening and capacity development

Capacity development helps to strengthen state institutions in developing and emerging countries. This includes efforts to establish an efficient correspondent banking network (through initiatives within the Financial Stability Board). Switzerland supports the Global Forum's 2017 plan of action to assist developing countries in building the necessary capacity for the automatic exchange of information (human resources, IT infrastructure, legal framework, risk management). Switzerland also makes financial contributions to the IMF's AML/CFT Topical Trust Fund, the Inter-American Center of Tax Administrations (CIAT), the African Tax Administration Forum (ATAF) and the World Bank's Global Tax Programme (GTP), among others, thereby giving developing countries a voice in international tax discussions.

o   Debt sustainability

At the core of the debt problem are weak institutions and misaligned economic policies in indebted countries. Switzerland therefore advocates structural reforms and a more transparent set of analytical tools for debt sustainability, primarily in the IMF, the World Bank and the G20. Through its development cooperation, Switzerland is one of the world's largest providers of technical assistance for debt management and the mobilisation of domestic revenue in developing countries. Switzerland thereby supports various IMF and World Bank initiatives, as well as efforts by the UNCTAD Debt Management and Financial Analysis System to improve debt recording and reporting.                                                                                                         

Last modification 09.10.2020

Top of page

https://www.sif.admin.ch/content/sif/en/home/finanzmarktpolitik/illicit-financial-flows/iff.html