FATF AML Deficiency List
Offshore Finance Center
US Dept of State Money Laundering assessment
Switzerland is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last Follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Switzerland was undertaken in 2019. According to that Evaluation, Switzerland was deemed Compliant for 8 and Largely Compliant for 27 of the FATF 40 Recommendations. It was also deemed Highly Effective for 0 and Substantially Effective for 7 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.
US Department of State Money Laundering assessment (INCSR)
Switzerland was last deemed a Jurisdiction of Primary Concern in the US Department of State 2018 International Narcotics Control Strategy Report (INCSR). The Overview from that report was as follows: -
Switzerland is a major international financial center where illicit financial activity occurs. Historically, foreign narcotics trafficking organizations, often based in Russia, the Balkans, and Eastern Europe, have dominated attempts at narcotics-related money laundering operations in Switzerland.
Switzerland has made progress in implementing KYC procedures in its financial industry, but needs to further improve oversight over actors that are vulnerable to money laundering, as well as over new players in the financial industry.
The most recent Swiss government statement of intent of June 2017 acknowledges the need to increase the scope of AML measures to all relevant actors and to strengthen the Swiss regime against criminal activity.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 85
World Governance Indicator – Control of Corruption 96
Corruption does not impede business in Switzerland. Interactions with public officials are transparent, and corruption is not common to any particular public sector. Bribery in the private sector is a concern given the large number of business headquarters in the country and the importance of financial institutions. The Swiss Criminal Code criminalises active and passive bribery and the bribery of foreign public officials, while bribery in the private sector is criminalised under the Unfair Competition Act. A company can be criminally prosecuted and ordered to pay a fine of up to CHF 5 million for acts of corruption committed by individuals working on its behalf. Although the notion of facilitation payments does not exist in Swiss anti-bribery laws, authorities have clarified that they are considered illegal under most circumstances. Gifts and hospitality can be considered illegal depending on the value, intent and benefit obtained. For further information - GAN Integrity Business Anti-Corruption Portal
Switzerland, a country that espouses neutrality, is a prosperous and modern market economy with low unemployment, a highly skilled labour force, and a per capita GDP among the highest in the world. Switzerland's economy benefits from a highly developed service sector, led by financial services, and a manufacturing industry that specializes in high-technology, knowledge-based production. Its economic and political stability, transparent legal system, exceptional infrastructure, efficient capital markets, and low corporate tax rates also make Switzerland one of the world's most competitive economies.
The Swiss have brought their economic practices largely into conformity with the EU's to enhance their international competitiveness, but some trade protectionism remains, particularly for its small agricultural sector. The fate of the Swiss economy is tightly linked to that of its neighbours in the euro zone, which purchases half of Swiss exports. The global financial crisis of 2008 and resulting economic downturn in 2009 stalled demand for Swiss exports and put Switzerland into a recession. During this period, the Swiss National Bank (SNB) implemented a zero-interest rate policy to boost the economy, as well as to prevent appreciation of the franc, and Switzerland's economy began to recover in 2010.
The sovereign debt crises unfolding in neighbouring euro-zone countries, however, coupled with ongoing economic instability in Russia and other eastern European economies continue to pose a significant risk to the Swiss economy, driving up demand for the Swiss franc by investors seeking a safe-haven currency. In January 2015, the SNB abandoned the Swiss franc’s peg to the euro, roiling global currency markets and making active SNB intervention a necessary hallmark of present-day Swiss monetary policy. The independent SNB has upheld its zero interest rate policy and conducted major market interventions to prevent further appreciation of the Swiss franc, but parliamentarians have urged it to do more to weaken the currency. The franc's strength has made Swiss exports less competitive and weakened the country's growth outlook; GDP growth fell below 2% per year from 2011-15.
In recent years, Switzerland has responded to increasing pressure from neighbouring countries and trading partners to reform its banking secrecy laws, by agreeing to conform to OECD regulations on administrative assistance in tax matters, including tax evasion. The Swiss government has also renegotiated its double taxation agreements with numerous countries, including the US, to incorporate OECD standards, and is openly considering the possibility of imposing taxes on bank deposits held by foreigners.
Agriculture - products:
grains, fruits, vegetables; meat, eggs
machinery, chemicals, watches, textiles, precision instruments, tourism, banking, insurance
Exports - commodities:
machinery, chemicals, metals, watches, agricultural products
Exports - partners:
Germany 14.2%, US 10.6%, Hong Kong 8.7%, India 7.3%, China 6.9%, France 6.1%, Italy 5.4%, UK 4.8% (2015)
Imports - commodities:
machinery, chemicals, vehicles, metals; agricultural products, textiles
Imports - partners:
Germany 20.7%, UK 12.8%, US 8.1%, Italy 7.8%, France 6.7%, China 5.1% (2015)
Investment Climate - US State Department
The Swiss Federal Government has a laissez-faire attitude towards foreign investment, allowing Switzerland’s 26 cantons (i.e. states) to largely shape the country’s investment policies. This federal approach to governance has helped the Swiss maintain long-term economic and political stability, a transparent legal system, an extensive and reliable infrastructure, efficient capital markets and an excellent quality of life for the country’s 8 million inhabitants. Many U.S. firms base their European or regional headquarters in Switzerland, drawn to the country's low corporate tax rates, productive and multilingual work force, and famously well maintained infrastructure and transportation networks. In 2015, the World Economic Forum once again rated Switzerland the world's most competitive economy – the country’s seventh consecutive #1 ranking. That high ranking not only reflects the country’s sound institutional environment, but also Switzerland’s ubiquitously high levels of technological and scientific research and investment.
With very few exceptions, Switzerland welcomes foreign investment, accords it national treatment, and does not impose, facilitate, or allow barriers to trade. According to the OECD, Swiss general public administration ranks #1 globally in output efficiency, while Switzerland’s public administration enjoys the highest public confidence of any national government in the OECD. Switzerland’s judiciary system is equally effective and efficient, posting the shortest trial length of any of the OECD’s 34 member countries.
Many of Switzerland's cantons make significant use of financial incentives to attract investment to their jurisdictions. Some of the more aggressive cantons have occasionally waived taxes for new firms for up to ten years; however, this practice has been criticized by the European Union and is consequently likely to be phased out between 2018 and 2020. Individual income tax rates vary widely across Switzerland’s 26 cantons. Corporate taxes also vary depending upon the country’s many different tax incentives. Zurich, which is sometimes used as a reference point for corporate location tax calculations within Switzerland, has a rate of around 25%, which includes municipal, cantonal, and federal tax.
Some formerly public Swiss monopolies continue to retain market dominance despite partial or full privatization. As a result, foreign investors sometimes find it difficult to enter these markets. Additionally, the OECD ranks Switzerland’s educational, healthcare and agriculture costs and subsidies as high when rated against output. The Swiss agricultural sector remains one of the best protected and heavily subsidized markets in the world. Despite heavy government support (direct payments comprise two thirds of an average farm income), Switzerland’s agricultural sector has the second lowest productivity among OECD members.
Switzerland is one of four members (together with Iceland, Liechtenstein, and Norway) of the European Free Trade Association (EFTA), an intergovernmental trade organization and a free trade area that operates in parallel with the European Union (EU) and participates in the EU's single market. With one million EU citizens living in Switzerland, 400,000 Swiss citizens living in the EU, and the EU accounting for the majority of Switzerland’s trade, the EU remains a critically important relationship for the Swiss. The Swiss public’s approval of a February 9, 2014 public referendum restricting immigration into Switzerland has, however, deeply strained current relations with the EU. While not a member of the EU, Switzerland remains politically bound to the European Union through its EFTA relationship, membership in the Schengen Area, and a series of more than 120 bilateral treaties. A “guillotine clause” in Switzerland’s many agreements with the EU stipulates that if one agreement is terminated or compromised, such as the free movement of people conditions in the Schengen Agreement, then the entire body of bilateral treaties will be null and void.
The implementation of the constitutionally binding February 9th, 2014 referendum on immigration restriction – which is set to enter into force by 2017 -- could therefore have enormous economic implications for Switzerland, particularly if it is implemented in violation of the Free Movement of Persons agreement. The Swiss government is currently in discussions with the EU on resolving this matter, with very little indication of a solution to date.
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