On the banks of the Cam

‘Putting the crooks out of business’ was the theme of the twentieth Cambridge international symposium on economic crime hosted by Jesus College, University of Cambridge (www.crimesymposium.org). The week-long event attracted the customary international array of luminaries and experts who offered broad insight into conduct of the financial war on organised crime and terrorism. Timon Molloy reports their current strategic and practical thinking.

Swiss assurance

It has never really been in doubt that financial institutions already prudentially regulated, such as the banks and insurance companies, should be supervised for money laundering, Dina Balleyguier, Director of the Money Laundering Control Authority of Switzerland (MLCA), told delegates in Cambridge. However, for those not so supervised, the situation varies by country. Switzerland has “full anti-money laundering [AML] supervision for all financial intermediaries even when there is no prudential regulator,” she said. The Swiss Federal Banking Commission (SFBC) supervises banks, broker-dealers, and investment managers, the Office of Private Insurance oversees insurance companies and the Federal Gaming Commission supervises casinos. Other intermediaries are overseen by self regulatory organisations (SROs), which, in turn, are authorised by the MLCA, but they all have to fulfil the same legal obligations to identify counterparties and beneficial owners, report suspicious transactions and maintain records. Hence, said Ms Balleyguier, coverage extends to all leasing companies, bureaux de change, money transmitters, dealers in precious metals, and lawyers when acting in these areas. “If they [lawyers] have no control over customer assets, then they are not subject to the [Money Laundering] Act but as soon as they assume the role of trustee or director they come under the law and must be licensed and fulfil all due diligence and suspicious transaction reporting obligations.” The most important criterion for licensing is the financial earnings from an activity, the threshold is CHF 20,000. In order to forestall organisations operating beneath this radar other factors will indicate that entities “act by profession” and require a licence; they are: a portfolio of ten or more clients or funds under management that exceed CHF5 million or transactions of more than CHF2 million per annum. Companies carrying out money exchange operations on a limited basis (ie, not as their main business) are subject to the MLA as soon as the sum changed exceeds CHF 5000. Even one such transaction will require a licence. Ms Balleyguier said she was confident that all parties who should be were covered by the regulatory regime – “More than 7,000 financial intermediaries are registered and supervised.” Since the majority are small, with not more than one or two employees, direct supervision by state authorities is not practical. As a result there is heavy reliance on the 12 SROs which are “much more than just trade associations”, she said. “They supervise and train members.”They also sanction through fines and exclusion from the industry for failure to comply with provisions of Act; in order to be readmitted either the MLCA must be satisfied that the entity has mended its ways or it must be accepted as a member of another SRO. Intermediaries may apply for direct supervision by the MLCA under which arrangement external auditors confirm that they have complied with the provisions of the Act. The auditors that carry out this work are licensed by the MLCA and their work must conform to a pattern specified by the Authority. The MLCA will audit such intermediaries itself every 3-5 years and may withdraw an auditor’s licence if it is found to have failed in correctly to perform its duties properly.