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How the Swiss offshore industry works, and which legal loopholes need to be plugged

In 2021, Public Eye published a satirical handbook for white-collar criminals. In it, we have detailed the advantages and legal loopholes through which suspicious deals or assets can be concealed in Switzerland. 

The situation has not improved since then:

  • Even today, there is no due diligence or verification obligation for advisors who create dubious company constructs for clients. In March 2021, the parliament rejected a revision of the Anti-Money Laundering Act, which would have imposed liabilities on lawyers who provide advisory services to set up shell companies. This must change. The Financial Action Task Force, which sets the global standards against money laundering and terrorist financing, also requires Switzerland to make lawyers providing advisory services subject to the Anti-Money Laundering Act. 

  • A register for beneficial ownership of companies is a worldwide minimum standard – but Switzerland does not have one. The disclosure of beneficial owners of legal entities is one of the most effective measures against white-collar crime. In a new recommendation, the Financial Action Task Force requires its members to increase transparency among companies by introducing a register of beneficial owners, among other measures. The EU has required its members to introduce a public register for years. Such a public register strengthens efficient international cooperation: offshore constructions do not stop at national borders. Switzerland should also conform to the EU standard. 

  • The real estate market is also still not subject to the Anti-Money Laundering Act. This despite the fact that the Federal Office of Police fedpol had, in 2013 already, noted how attractive for money launderers this sector is. Politically exposed persons (PEPs) or a criminal organisation can still buy a villa in a prime location via offshore companies registered in a tax haven – without any major questions being asked. Neither real estate agents nor notaries are obliged to check the origin of the money. Here, too, the Financial Action Task Force recommends a corresponding legislation change. 

  • Bankers with a licence to be negligent: bankers can be charged if they have failed to ascertain the origin of funds and the beneficial owners of a company (art. 305ter Swiss Criminal Code). Or if they have not complied with the duty to report suspicious transactions (art. 37 Anti-Money Laundering Act). But they often face only minor penalties, usually only a small fine, if they claim not to have noticed such transactions or not to have kept the corresponding documents. 

  • Switzerland’s banking secrecy law was amended in 2015 to make disclosing information about a bank’s clients a criminal offence. In February 2022, the effects of the amendment showed for the first time during the publication of the “Suisse Secrets”. The investigative desk of Swiss media organization Tamedia had to withdraw its participation in the international consortium that published the leaked documents from Credit Suisse as it feared legal action. The amendment is a powerful tool to dissuade journalists and NGOs from unwanted investigations. 

  • The Swiss offshore industry is as thriving in 2022 as ever. Our lawyers and fiduciaries remain true masters in creating empty shells and company constructs to which the justice system has no access. You do not even have to be a resident in Switzerland, with a few clicks online you can set up a company in Switzerland – or on the British Virgin Islands – in no time at all. 

Corruption «Made in Switzerland» The Swiss handbook for white-collar criminals