Swiss to Ban Big Cash Purchases to Curb Money Laundering
Switzerland is proposing to ban cash payments in excess of 100,000 francs ($107,500), including on watches and real estate, and wants to tighten the due diligence requirements for banks to prevent money laundering.
Transactions above that amount will have to be processed through a bank, the government said in a draft law presented in Bern today. Political parties and interest groups will now be able to comment on the proposal.
According to the proposal, banks will also have to undertake thorough checks to ensure funds are tax-compliant and must in the future refuse to accept any funds they believe are not declared. A clients’ wish to use complex holding structures could be considered an indicator of elevated risk, the government said. In the case of existing accounts, a client whose behavior seemed suspicious would have to prove his money was declared and the bank would terminate the account if he were unable to provide the evidence.
The Swiss Banking Association said that while it welcomed the risk-based assessment, it opposed “general” due diligence requirements for clients, according to a statement today. “The mandatory termination of existing coustomer relationships in cases of tax dishonesty is to be rejected,” it said.
Watches, including some of those made by Swatch Group (UHR) AG and Cie. Financiere Richemont SA (CFR), can cost tens of thousands of francs. Richemont’s Roger Dubuis brand sells its rose-gold version of the Excalibur Quatuor watch for 380,000 francs.
Finance Minister Eveline Widmer-Schlumpf said there was no evidence of watches being used to launder money.
“We just said that if you’re proceeding in this manner with property and disallow cash purchases to prevent even the appearance of money laundering, then you have to do that for luxury goods as well,” she told reporters in the Swiss capital today. “Above 100,000 it doesn’t seem to be common practice to pay in cash.”
The government is also proposing to ramp up the penalty for tax fraud in excess of 600,000 francs.
The government said it was proposing the measures to implement recommendation from the Financial Action Task Force, an international organization tasked with co-ordinating the fight against money laundering.
The European Union is also ramping up rules to stop money laundering. A Feb. 5 proposal would force companies such as banks and law firms to carry out checks on their customers if they carry out cash transactions worth at least 7,500 euros ($9,800), compared with a 15,000 euro threshold under existing EU law.
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