Swiss report five-fold rise in frozen dubious wealth

Swiss report five-fold rise in frozen dubious wealth
REUTERS

GENEVA, JUNE 27: Switzerland on Tuesday reported a five-fold increase in funds frozen for suspected money laundering and said the rise demonstrated its determination to get tough on criminals.

But critics said the blocked money represented the tip ofthe iceberg in the country's secretive private banking industry that manages a third of the world's off-shore wealth and an estimated $2 trillion in client accounts.

The Money Laundering Reporting Office of the Swiss Federal Police said Swiss banks had temporarily blocked 1.5 billion Swiss francs ($909 million) in dubious wealth in the year to March 31, up from 330 million frozen in the year-ago period.

The figures came a day after the OECD published a list of 35 tax havens and a week after a G7 task force published a money laundering blacklist. Switzerland, unlike neighbouring Liechtenstein, escaped both.

Daniel Thelesklaf, head of the Swiss anti-money-laundering office, said banks accounted for 85 per cent of the 370 tips it received. Prosecutors were alerted to two thirds of cases.

``It shows that rules against money laundering are being taken seriously by actors in the Swiss Financial centre,'' said Thelesklaf. ``The numbers come closer to the importance of Switzerland as a financial centre than did last year's figures.''

Critics disagreed, noting that 1.5 billion francs is a relative pittance considering the top two Swiss banks, UBS AG and Credit Suisse Group, together manage more than three trillion Swiss francs in client accounts.

``This is not a lot of money for Switzerland given the total amount that is here,'' said Beat Bernet, a professor of banking at St Gallen University.

A Swiss money laundering law, passed in April 1998, obliges banks and non-bank financial institutions such as asset managers, foreign exchange bureaus and lawyers to report suspicious accounts to the state and to freeze the assets.

But in a country that prosecutes bankers for revealing information about clients, reporting rich customers to police goes against the grain.

``The problem is not Swiss banks, but the bankers...A lot more needs to be done in the area of banking supervision as well as enforcement,'' Bernet told Reuters.

Criminal proceedings were started in 63 per cent of the 107 cases prosecutors followed up. Authorities said a large number of cases were triggered by probes into alleged Russian money laundering and the Swiss bank accounts of Nigeria's former dictator Sani Abacha.

The discovery of $670 million in Abacha funds at 17 banks more than two years after the enforcement of stricter money laundering laws raised questions about the credibility of Swiss efforts to crack down on dirty money.

``Things like the Abacha affair should never happen again, but every year we have one or two of these cases,'' Bernet said.

Thelesklaf said most funds involving Abacha had likely been reported already. ``I'd be surprised if another big push came,'' he said in Berne.

Efforts to crack down on money laundering come at a time of growing pressure on Switzerland to abolish its banking secrecy laws. Thelesklaf said his office's work was the main reason Switzerland had escaped recent international criticism.

Geneva chief prosecutor Bernard Bertossa, who says banks are not living upto their reporting obligations under the new law, said the latest figures represented progress.

`Just remember that two years ago, the number of reports from banks on suspicious clients was almost nothing,'' Bertossa said, referring to the old system that gave banks the right but not the obligation to report their suspicions.

``From zero to 1.5 billion Swiss francs, that's not bad.''