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Switzerland Country Summary

75.31 Country Rating /100
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Sanctions

No

FATF AML Deficient List

No

Terrorism
Corruption
US State ML Assessment
Criminal Markets (GI Index)
EU Tax Blacklist
Offshore Finance Center

Background Information


Anti Money Laundering

FATF Status

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 2023. According to that Evaluation, Switzerland was deemed Compliant for 8 and Largely Compliant for 29 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. 

Sanctions

There are no international sanctions currently in force against this country.

Bribery & Corruption

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                         82

World Governance Indicator – Control of Corruption             97

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

Economy

Switzerland is welcoming to international investors, with a positive overall investment climate. The Swiss federal government enacts laws and regulations governing corporate structure, the financial system, and immigration, and concludes international trade and investment treaties. However, Switzerland’s 26 cantons (analogous to U.S. states) and largest municipalities have significant independence to shape investment policies locally, including incentives to attract investment. This federal approach has helped the Swiss maintain long-term economic and political stability, a transparent legal system, extensive and reliable infrastructure, efficient capital markets, and an excellent quality of life for the country’s 8.7 million inhabitants. Many U.S. firms base their European or regional headquarters in Switzerland, drawn to the country’s modest corporate tax rates, productive and multilingual workforce, and well-maintained infrastructure and transportation networks. U.S. companies also choose Switzerland as a gateway to markets in Eastern Europe, the Middle East, and beyond. Furthermore, U.S. companies select Switzerland because of favorable and less restrictive labor laws compared to other European locations as well as availability of a skilled workforce.

In 2019, the World Economic Forum rated Switzerland the world’s fifth most competitive economy. This high ranking reflects the country’s sound institutional environment and high levels of technological and scientific research and development. With very few exceptions, Switzerland welcomes foreign investment, accords national treatment, and does not impose, facilitate, or allow barriers to trade. According to the OECD, Swiss public administration ranks high globally in output efficiency and enjoys the highest public confidence of any national government in the OECD. The country’s competitive economy and openness to investment brought Switzerland’s cumulative inward direct investment to USD 1.0 trillion in 2021 (latest available figures) according to the Swiss National Bank, although nearly half of this amount is invested in regional hubs or headquarters that further invest in other countries.

Switzerland has set a 2050 target for net-zero emissions, and in January 2021 it adopted a corresponding Long-Term Climate Strategy, which sets out climate policy guidelines up to 2050 and establishes strategic targets for the buildings, industry, transport, agricultural and food sectors, financial markets, aviation, and the waste industry. In February 2020, Switzerland updated its nationally determined contribution (NDC) to reflect the latest findings by the IPCC indicating a need to reduce global CO2 emissions by about 45 percent from 2010 levels by 2030, and to achieve full carbon neutrality by 2050 in order to limit warming to 1.5 degrees Celsius.

Since Russia’s war of aggression against Ukraine, the Swiss government has mirrored all of the EU’s sanctions targets against Russia, with the State Secretariat for Economic Affairs having frozen CHF 7.5 billion ($8 billion) of Russian illicit wealth held in Switzerland. Due in part to Russia’s war, Switzerland’s average annual inflation rose in 2022 to 2.8 percent, up from 0.6 percent in 2021. Overall, however, the Swiss economy has generally seen less adverse impact from the Russian invasion than other European countries due to lower increases in utility prices (most electricity is generated by hydro and nuclear power) and a strong currency, which has helped to ease import prices for commodities like fertilizer and fuels.

In order to address international criticism of tax incentives provided by Swiss cantons, the Federal Act on Tax Reform and Swiss Pension System Financing (TRAF) entered into force on January 1, 2020. TRAF obliges cantons to offer the same corporate tax rates to both Swiss and foreign companies, while allowing cantons to continue to set their own cantonal tax rates and offer incentives for corporate investment. These can be deductions or preferential tax treatment for certain types of income (such as for patents), or expenses (such as for research and development). Switzerland joined the Statement of the OECD/G20 Inclusive Framework on Base Erosion and Profit Sharing (BEPS) in July 2021. It intends to implement the BEPS effective minimum corporate tax rate of 15 percent by January 2024, after a referendum to amend the Swiss constitution.

Personal income and corporate tax rates vary widely across Switzerland’s cantons. Effective corporate tax rates ranged between 11.85 and 21.04 percent in 2022, according to KPMG. In Zurich, for example, the combined effective corporate tax rate (including municipal, cantonal, and federal taxes), was 19.65 percent in 2022. The United States and Switzerland have a bilateral tax treaty.

Key sectors that have attracted significant investments in Switzerland include information technology, precision engineering, scientific instruments, pharmaceuticals, medical technology, and machine building. Switzerland hosts a significant number of startups. A new “blockchain act” came fully into force in August 2021, which is expected to benefit Switzerland’s already sizeable ecosystem for companies in blockchain and distributed ledger technologies.

There are no “forced localization” laws designed to require foreign investors to use domestic content in goods or technology (e.g., data storage within Switzerland). Switzerland follows strict privacy laws and certain personal data may not be collected in Switzerland.

Switzerland is a highly innovative economy with strong overall intellectual property protection. Switzerland enforces intellectual property rights linked to patents and trademarks effectively, and new amendments to the country’s Copyright Act to strengthen copyright enforcement on the internet came into force in April 2020.

There are some investment restrictions in areas under state monopolies, including certain types of public transportation, telecommunications, postal services, alcohol and spirits, aerospace and defense, certain types of insurance and banking services, and the trade in salt. The Swiss agricultural sector remains protected and heavily subsidized.

 

Country Links

Money Laundering Reporting Office Switzerland (MROS )​

Swiss National Bank

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