Debate: Suisse Secrets - How to implement anti-money laundering standards in third countries
Date: WEDNESDAY, 23 MARCH 2022
Speaker: Mairead McGuinness
Language: EN

We’ve all followed successive revelations on money laundering with huge concern. These Swiss secrets are just the latest. They reveal that Credit Suisse maintained business relationships with dozens of corrupt government officials, criminals and alleged human-rights abusers for several years. In the Commission, we’ve made the fight against money laundering and the financing of terrorism a key priority. And we know that there is work to be done to tackle this issue. We stepped up the fight with the adoption of the legislative package in July of last year, and I know that we can rely on this House to work in a timely way on these proposals. The Commission has put a particular focus on the enforcement of existing rules, as communicated in the action plan on money laundering in May 2020. We all share the view that we need to continue to strengthen our defences against money laundering and terrorism financing in the Union and that we need to address the risks from third countries. So now I want to turn to the ‘Swiss secrets’ case in more detail. Like the European Parliament, the Commission regards these revelations as very concerning. I would like to reassure this House that we will not ignore the severe failings which this case has laid bare. I am determined to spare no effort in the fight against money laundering and the financing of terrorism, both in the EU and in third countries. The war in Ukraine is showing yet again that there is a need to clean up the financial system. We are determined to continue our work within the Union and with our allies to rid the global financial system of money laundering.  The Swiss secrets revelations focus on the shortcomings of Credit Suisse in its customer due diligence checks. Credit institutions need to verify customer identities and the source of funds to avoid their services being used to launder money. The intensity of these checks depends on the customer’s risk profile. The proper application of customer due diligence for onboarding customers and throughout the entire business relationship is a cornerstone of the EU’s preventative framework for anti-money laundering and countering terrorism financing. We have carefully analysed the implications of the Swiss secrets revelations to ensure that the EU’s financial system is protected. To our knowledge, and according to the information from the investigative journalists, the cases revealed refer exclusively to this particular bank and its activities in Switzerland. I would like to underline that all subsidiaries and branches of third-country institutions in the EU must apply EU rules and are supervised for their implementation accordingly. However, deficiencies in a third country’s anti-money laundering framework can also pose a problem for the EU, where there is a high level of integration of the financial system and a high volume of cross-border transactions with the EU. The Commission has a legal obligation to protect the functioning of the EU’s internal market, and that is why, in line with our Anti-Money Laundering Directive, the Commission has to identify third countries with strategic deficiencies in their national anti-money laundering and countering of terrorism regimes. Switzerland’s anti-money laundering framework and its implementation were assessed by the Commission in 2019. That assessment found deficiencies in the Swiss framework. This autonomous assessment also took into account the results of the mutual evaluation report of Switzerland in 2016 by the Financial Action Task Force – the global standard-setter in the fight against money laundering and terrorist financing. The European Union and Switzerland have strong economic ties. As recently demonstrated, the Commission is working closely with Switzerland on sanctions imposed on Russia. An important element of our approach towards third countries is dialogue and cooperation with the countries concerned. The Commission has already engaged with its Swiss counterparts to improve Switzerland’s measures to fight money laundering. The Commission met with the Swiss authorities most recently on 1 March of this year. This approach of dialogue and engagement is starting to show positive results. Switzerland has adopted reforms in relation to the fight against money laundering over the past few years. In March of last year, the Swiss Parliament passed amendments to the Swiss AML (anti-money laundering) Act. These amendments include an obligation for banks to verify beneficial owners and apply higher standards of ‘know your customer’ procedures. My services are taking a closer look at these latest reforms and are analysing whether they address the issues revealed by Swiss secrets. We understand that these amendments enter into force in July of this year. This is a step in the right direction, but effective implementation is of the utmost importance and the Commission will closely follow up on this. We are intensifying contact with Swiss counterparts to impress on them our concerns. We will maintain our dialogue with Switzerland to ensure deficiencies are tackled and we will thoroughly monitor developments. Before concluding, I would like to address the demands raised by some political groups and members to consider adding Switzerland to our list of high-risk jurisdictions in the immediate future. At this stage, the Commission is of the view that including Switzerland in our list of high-risk third countries would be premature. The Swiss secrets refer to one Swiss bank and concern issues which, in some instances, date back several years. We have a constructive dialogue with Switzerland, and recent reforms appear to deal with shortcomings related to customer due diligence procedures in the Swiss framework. According to our rules, the EU listing cannot occur before the dialogue with the relevant third country has been exhausted. We have ongoing engagement with Switzerland and we must ensure that this dialogue with our Swiss counterparts yields positive results and ultimately addresses our concerns regarding the Swiss anti-money laundering and countering of terrorism framework. But I really want to assure this House this evening that we will carefully monitor Switzerland’s progress. Should this progress be insufficient, or current engagement be broken, we do not rule out taking further action. And, of course, the Commission will keep the European Parliament fully informed on all developments.