Swiss govt says 5-times faster than others on foreign queries

Long perceived to hide information on illicit wealth from India and other countries in its banks, Switzerland has said it replies five times faster than the foreign governments to the inquries made from abroad on suspected money laundering cases.

Updated: May 15, 2012, 15:31 PM IST

New Delhi: Long perceived to hide information on illicit wealth from India and other countries in its banks, Switzerland has said it replies five times faster than the foreign governments to the inquries made from abroad on suspected money laundering cases.

Swiss government's official agency for monitoring money laundering cases has said it replied within an average of five days to inquiries from Financial Intelligence Units (FIUs) of foreign governments in 2011, but the average response time for its own queries sent to other countries was 25 days.

In its annual report for 2011, the Money Laundering Reporting Office of Switzerland (MROS) has said it responded to a total 564 inquiries from FIUs (Financial Intelligence Units) of 80 countries during the year.

While it did not disclose the names of individual countries, MROS said it mainly shares information with the member states of the Egmont Group -- an international grouping of over 100 FIUs from across the world, including India.

MROS, part of Swiss Federal Office of Police, is Switzerland's central money laundering office and functions as a relay and filtration point between financial intermediaries and the law enforcement agencies.

The agency said that the number of persons and entities who were the subject of inquiries from foreign FIUs increased by nearly 10 per cent to a total of 2,123 in 2011.

The largest number of such persons and entities were from the US (306), followed by Luxembourg (181), Egypt (156), France (144), Liechtenstein (99), Spain (94), Austria (94) and Russia (4). A total of 965 persons/entities belonged to various other countries, which could include India, but the MROS report did not specifically mention the names of the country.

The issue of alleged black money stashed in banks in Switzerland and other foreign countries has been a topic of hot debate in India and various other countries.

MROS further said it responded to FIU inquiries within an average of five working days following their receipt in 2011. This was slower than in 2010 (four working days), but still well within the 30 days defined in the Egmont Group's Best Practice Guidelines, it added.

In contrast, the foreign FIUs took an average of 25 working days in 2011 (an increase of three days from 2010) to reply to inquiries by MROS. The Swiss agency sent 159 inquiries on 999 persons/entities in 2011 to 53 foreign FIUs.

"The FIUs in some countries fail to adhere to these guidelines, which means that MROS often has to wait several months or even longer for a reply. In comparison, MROS response time to inquiries from foreign FIUs is very fast," MROS said.

The number of foreign FIU inquiries that MROS had to turn down on formal grounds also declined to 48 in 2011, from 77 in the previous year.

"Most of these inquiries either had no direct connection to Switzerland (so-called fishing expeditions), or concerned specific financial information that may only be provided by virtue of a mutual legal assistance request," it added.

Once MROS receives an inquiry from a foreign FIU, it runs a computer check on the person or entity mentioned to see whether their name is already listed in existing databases.

The details of such persons/entities are then entered into MROS' own money laundering database, and the agency then checks the names of all persons or entities mentioned in the SARs (Suspicious Activity Reports) received from Swiss financial institutions.
If a name is found in the database, MROS knows that the concerned person or entity in question is already suspected of possible criminal activity abroad.

In its annual report, MROS said that it received a record number of 1,625 SARs, involving the highest ever amount of over USD 3.2 billion in 2011.

MROS has given various details concerning the types of its 'suspicious activity reports (SARs)', and the numbers of clients and account holders named therein, as also the names of the top countries where such clients are based. However, India does not figure among the countries mentioned here.

The largest number of clients mentioned in these SARs were from Switzerland itself (320), followed by Africa (212), Caribbean (177), Central and South America (172), Italy (123), Remaining Western Europe (103) and Middle East (102).

The total number of clients with Asian nationality was only 45, less than half of 103 in 2010, while the nationality was not known of one client.

MROS said about two-thirds of SARs came from the banking sector, while the most number of SARs - nearly one-third - were submitted in connection with fraud as the suspected offence.

The number of SARs with suspected bribery, embezzlement or membership of a criminal organisation as suspected offence increased two-fold. Most cases involving suspected connections to a criminal organisation concerned the Italian Mafia. There was also a significant increase in SARs relating to suspected drugs offences.

However, the number of SARs relating to suspected terrorist financing fell from 13 in 2010 to 10 in 2011. The 10 cases involved assets totalling only about CHF (Swiss Francs) 152,000, CHF 1,44,000 of which were related to one single case.

Among the SARs related to terror funding, countries like Pakistan, Afghanistan, Uzbekistan, Tunisia, England, Somalia, Albania, Kosovo, Italy, UAE and Switzerland were identified for nationality of the client and the beneficial owner.