Switzerland’s financial markets regulator stated on Thursday that a thorough investigation of more than 30 banks this spring revealed that “a large number” did not adhere to the fundamental standards for assessing the danger of money laundering.
The regulator, referred to as FINMA, claimed that recurrent indications of weaknesses in money-laundering risk analysis during its routine inspections of financial institutions served as the impetus for the study. Because Switzerland leads the world in wealth management, the negative evaluation of the banks—which were not named—is noteworthy. By 2025, according to predictions made by consulting company Boston Consulting Group in its Global Wealth Report 2023, Hong Kong will overtake Switzerland as the world’s wealthiest city. Although some money-laundering specialists claim Switzerland has at least partially cleaned up its act in recent years, such as by exchanging more information to help combat tax avoidance by depositors, the country has a long history of banking secrecy. The paper stated that “FINMA reviewed risk analyses of over 30 banks in spring 2023.” In doing so, it was discovered that many of the risk studies looked at did not comply with the fundamental specifications for such an analysis. The authority identified “some cases” where banks failed to give a sufficient description of risk tolerance for money laundering, which would include putting restrictions in place to reduce risks. The authority recommended that many of the banks take additional measures to combat money laundering and issued guidelines for institutions to follow, including a suggested table of categories. For instance, it claimed that the reviewed banks frequently failed to establish the appropriate exclusions for certain nations, clientele groups, and services or goods, such as for “politically exposed persons” — people who play major roles in specific nations. Moreover, according to the authority, the majority of banks failed to set up appropriate procedures for allowing for exceptions. The investigation discovered that banks had not broken down risks “individually or comprehensively” or that some key risk categories had been missed. Some banks failed to gather important data on the likelihood that their customers would be involved in money laundering. A number of money laundering incidents involving Swiss financial institutions have recently been uncovered by authorities in Switzerland and other countries. Credit Suisse was penalized more than $2 million by a Swiss court in June of last year for failing to stop money laundering associated with a Bulgarian criminal organization more than ten years ago. Earlier this year, a number of issues at Credit Suisse, long Switzerland’s No. 2 bank, put the world’s financial markets in jeopardy and prompted rival UBS to acquire it two months ago.
