GwG and limits

Circle of persons who are not covered

Due to the absence of the risk of abuse, the following institutions are excluded from the scope or application of the GwG (cf. Art. 2 Para. 4 GwG):

  • Swiss National Bank;
  • tax-exempt occupational pension institutions;
  • persons who render their services exclusively for tax-exempted occupational pension institutions;
  • financial intermediaries from the non-banking sector (Art. 2 Para. 3 GwG) who render their services exclusively vis-à-vis financial intermediary pursuant to Art. 2 Para. 2 or vis-à-vis non-domestic financial intermediaries who are subject to comparable supervision to these.

It is essentially the case that the question of whether non-domestic supervision is comparable can be answered by making enquiries with the FINMA.

Exclusivity

Financial intermediaries from the non-banking sector (Art. 2 Para. 3 GwG) are not covered by the scope of the GwG pursuant to Art. 2 Para. 4 GwG only insofar as these render their financial intermediary services exclusively vis-à-vis financial intermediaries pursuant to Art. 2 Para. 2 GwG (so-called banking sector) or tax-exempt occupational pension institutions.

However, if financial intermediary services are also rendered vis-à-vis a third-party circle of persons beyond the described circle of financial intermediaries which do not fulfil the aforementioned criteria, then the characteristic of “exclusivity” shall no longer be deemed to be fulfilled. Consequence: the entire financial intermediary services of the financial intermediary shall be subject to supervision, insofar as the criterion that the activity is performed on a professional basis is also fulfilled.

Predicate crimes which are not covered

A conviction for money laundering is possible only if the criminal origin of the assets has successfully been proven.

This consequently means that the predicate crime relating to the assets must constitute a crime within the meaning of Art 10 StGB, i.e. acts which are punishable with terms of imprisonment of more than three years.

Definition of crime

Against this backdrop, tax offences cannot (currently) be deemed to constitute money laundering predicate crimes as they do not constitute crimes under Swiss law. It is specifically the case that Swiss law distinguishes between:

  • tax evasion and
  • tax fraud

within the context of tax offences. While tax evasion is deemed to constitute a misdemeanour, tax fraud is deemed to constitute a crime.

The Financial Action Task Force (FATF), which is affiliated to the Organisation for Economic Cooperation and Development (OECD), has already approved a partial amendment of its recommendations concerning the combating of money laundering (February 2012). This means that tax crimes (“Steuerdelikte”) will also be considered predicate crimes in conjunction with money laundering. It is the responsibility of individual states to draw up more specific provisions detailing the “tax crimes” covered. From a Swiss perspective, it remains to be seen whether and if Swiss lawmakers actually put the proposals into law. If Switzerland fails to implement the revised FATF recommendations, then it would clearly suffer reputational damage.

Financial Action Task Force (FATF)

The Financial Action Task Force (FATF) is an international body dedicated to combating money laundering and terrorism finance. The FATF is affiliated to the OECD and encompasses 35 member states (inter alia Switzerland). Within the context of combating money laundering, the FATF has implemented minimum standards within the meaning of 40 recommendations which do not represent directly binding law (so-called “soft law”) within the meaning of the rules of uniform codes of conduct and benchmarks for the financial sector.

FATF homepage | fatf-gafi.org

40 recommendations | fatf-gafi.org