Money launderingCriminal enforcement
Which government entities enforce your jurisdiction’s money laundering laws?
Depending on the circumstances, money laundering can be prosecuted at the federal or cantonal level. Specifically, federal prosecutors are competent if the act has predominantly been committed outside Switzerland or if it has been committed in several cantons without there being a focus on any one canton (article 24, Swiss Criminal Procedure Code). However, federal prosecutors have the right to delegate investigations to cantonal prosecutors in minor cases (article 25(2) of the Swiss Criminal Procedure Code).
Offenders against the money laundering provision of the Swiss Criminal Code (SCC) are prosecuted ex officio.
The Money Laundering Reporting Office Switzerland (MROS) plays a central role in the prosecution of money laundering. It receives both mandatory and voluntary reports regarding suspected cases of money laundering. The MROS, which is administratively linked to the Federal Office of Police, examines and analyses suspicious activity reports (SARs). If the MROS concludes that a report deserves further investigation, it forwards the information to the competent prosecutors (article 23(4), Anti-Money Laundering Act (AMLA)).
The SAR template is available on the Federal Office of Police’s website.
Breaches of the duty to report any suspicious activity to the MROS (article 37, AMLA) are pursued by the Federal Department of Finance (article 50(1), Financial Market Supervision Act (FINMASA)). The same applies to breaches of the merchants’ duty to instruct an auditor (article 38, AMLA). If, as part of its general prudential and regulatory supervisory powers, the Swiss Financial Market Supervisory Authority (FINMA) becomes aware of such a breach, it must alert the Federal Department of Finance accordingly.
Breaches of any other provisions set out in the AMLA are pursued by FINMA itself (article 56, FINMASA).Defendants
Can both natural and legal persons be prosecuted for money laundering?
Under Swiss law, both natural and legal persons can be prosecuted for money laundering. The rules governing corporate criminal liability for acts committed by individuals in the exercise of the corporation’s commercial activities are set out in the SCC, which distinguishes between two types of corporate criminal liability:
- article 102(1) provides that a legal person will be held liable if an offence is committed in a corporation in the exercise of its commercial activities and if it is not possible to attribute this offence to any specific natural person owing to the inadequate organisation of the corporation; and
- article 102(2) provides that a legal person will be held liable for certain offences (including money laundering) committed in the exercise of its commercial activities if the corporation has failed to take all reasonable organisational measures that are required to prevent such an offence.
In both cases, a relevant crime must have been committed in the corporation in the exercise of commercial activities in accordance with the objects of the corporation. In a judgment rendered on 11 October 2016 (6B_124/2016), the Federal Supreme Court denied a corporation’s criminal liability based on a lack of proof that the crime of money laundering had been committed by at least one individual within the corporation. It confirmed that corporate liability under article 102(2) of the SCC does not require an individual to be convicted of money laundering, but it does require proof that at least one individual in the corporation fulfils all objective and subjective elements of money laundering.The offence of money laundering
What constitutes money laundering?
Pursuant to article 305-bis of the SCC:
[a]ny person who carries out an act that is suitable to frustrate the identification of the origin, the tracing or the forfeiture of assets that he knows or must assume originate from a felony or aggravated tax misdemeanour is liable to a custodial sentence not exceeding three years or to a monetary penalty.
In law enforcement practice, it is the threat of frustrating forfeiture that plays the most important role. According to the Federal Supreme Court, the person committing the predicate offence can concurrently incur liability based on article 305-bis of the SCC, meaning that, under Swiss law, an offender can be convicted for laundering the proceeds of his or her own criminal behaviour.
The offence of money laundering requires the prosecution to show intent; mere negligence is not sufficient. According to the Federal Supreme Court, money laundering can be committed through omission if the offender has an affirmative obligation to take certain actions, such as the duty to clarify unusual or suspicious transactions or to file a report to the MROS under the AMLA.
If the culpability of the offender and the consequences of the offence are negligible, the competent authority can refrain from prosecuting the offender, from bringing the offender to court or from punishing the offender (article 52, SCC).
Additionally, the surrogates of and proceeds from assets originating from a felony are equally covered by article 305-bis of the SCC.
Finally, aiding and abetting a person to launder money is also a crime (article 25 in conjunction with article 305-bis, SCC).Qualifying assets and transactions
Is there any limitation on the types of assets or transactions that can form the basis of a money laundering offence?
There are no such limitations under Swiss law. Any object of economic value can, in principle, be subject to money laundering.Predicate offences
Generally, what constitute predicate offences?
Generally, all crimes that are considered felonies are recognised as predicate offences to money laundering under Swiss law. Pursuant to article 10(2) of the SCC, any offence that is punishable with more than three years’ imprisonment qualifies as a felony. Consequently, predicate offences include fraud (article 146, SCC), handling stolen goods (article 160, SCC), robbery (article 140, SCC), certain forms of drug dealing (article 19(2), Narcotics Act), bribery (article 322-ter, SCC), participation in a criminal or terrorist organisation (article 260-ter, SCC) and trafficking (article 182, SCC).
In addition, aggravated tax misdemeanours have also been defined as predicate offences, even though such conduct not constitute a felony. An aggravated tax misdemeanour is defined as tax fraud relating to direct taxes (income tax, profit tax, etc), provided that the tax evaded in any tax period exceeds 300,000 Swiss francs (article 305-bis(1-bis), SCC).
The offender is also liable where the predicate offence was committed abroad, provided that it is also liable to prosecution at the place of commission (article 305-bis(3), SCC).Defences
Are there any codified or common law defences to charges of money laundering?
No special defences apply and only the standard defences set out in the SCC, such as duress (article 17) or diminished responsibility (article 19), are available to a defendant. However, considering the offence of money laundering, they are of limited (if any) practical relevance.Resolutions and sanctions
What is the range of outcomes in criminal money laundering cases?
The sanction for money laundering is a fine or up to three years’ imprisonment, or, in severe cases, a fine of up to 1.5 million Swiss francs and up to five years’ imprisonment. Severe cases exist where the offender acts as a member of a criminal or terrorist organisation, as a member of a gang formed for recurrent commission of money laundering or where, through commercial money laundering, a large turnover or substantial profits are achieved (article 305-bis(2), SCC). The Federal Supreme Court has considered 100,000 Swiss francs as a large turnover, irrespective of the length of the period in which the proceeds were generated, and 10,000 Swiss francs as a substantial profit.
If regulatory measures are taken in addition to criminal enforcement, the competent authority can impose a disqualification order, order forfeiture or revoke licences (articles 33, 35 and 37, FINMASA).Forfeiture
Describe any related asset freezing, forfeiture, disgorgement and victim compensation laws.
In Switzerland, a court can order forfeiture of any assets that are the proceeds of a crime. Where a third party has suffered harm from the crime, the forfeited assets can be awarded to the person harmed (articles 70(1) and 73(1), SCC).
Forfeiture is, however, excluded (under article 70(2), SCC) if a third person has acquired the assets in good faith and provided that:
- the person has paid consideration of equal value in return; or
- forfeiture would cause disproportionate hardship to him or her.
The right to order forfeiture for money laundering is limited to 10 years. For severe cases, the limitation period is 15 years (articles 70(3), and 97(1)(b) and 97(1)(c), SCC). The limitation period starts when the money laundering process is terminated. An official notice regarding forfeiture must be given. All rights of third parties or harmed persons are subject to a five-year limitation period as of the date of notice (article 70(4), SCC).
If forfeiture is impossible because the assets are no longer extant, the court can uphold a claim for an equivalent sum (compensation claim). When enforcing a compensation claim in relation to third parties, the principles set out above apply. To enforce a compensation claim, the prosecution is allowed to seize the assets of the person concerned.
Finally, a financial intermediary may have to freeze assets in connection with a SAR filed to the MROS, based on a suspicion that assets involved in a business relationship:
- are the proceeds of a felony or of an aggravated tax misdemeanour;
- are connected to money laundering, or to a criminal or terrorist organisation, that pursues the objective of committing crimes of violence or that aims at financial gain by criminal means;
- serve the financing of terrorism; or
- are subject to the power of disposal of a criminal or terrorist organisation.
Specifically, the assets concerned must be frozen by the financial intermediary if, following the filing of a SAR, the MROS informs that it has forwarded the information to the competent criminal prosecution authority (article 10, AMLA). In addition, if a SAR is based on terrorist lists (ie, information provided to the financial intermediary by FINMA, the Federal Gaming Board, a supervisory organisation or a self-regulating organisation), the financial intermediary must freeze the assets as soon as the relevant SAR is filed with the MROS (article 10(1-bis), AMLA).
The affected assets are to remain frozen until an order is received from the competent prosecution authority, but at most five working days as of the confirmation that information has been forwarded to the competent criminal prosecution authorities or, if the SAR is based on terrorist lists, at most five working days as of the filing of the SAR with the MROS (article 10(2) AMLA).Limitation periods on money laundering prosecutions
What are the limitation periods governing money laundering prosecutions?
Under Swiss law, not only the limitation period concerning money laundering but also the limitation periods for the relevant predicate offences may bar prosecutors from bringing money laundering charges. The limitation periods for the various predicate offences vary and, if the predicate offence has been committed abroad, the laws of that country are relevant to determine the limitation period, at least if the limitation period of that country is longer.
Additionally, only proceeds that can still be subject to forfeiture can be the subject of money laundering. According to article 70(3) of the SCC, the standard limitation period concerning forfeiture is seven years, but it may be longer if the limitation period of the predicate offence exceeds seven years, as is the case, for example, in relation to kidnapping, where the limitation period is 15 years.
The limitation period for money laundering is usually 10 years (article 97(1)(c), SCC). In severe cases, it is 15 years (article 97(1)(b), SCC).
As money laundering is a continuous offence that stops only once the laundering process is terminated, the limitation period starts to run once the offence is terminated (article 98(c), SCC).Extraterritorial reach of money laundering law
Do the money laundering laws applicable in your jurisdiction have extraterritorial reach?
The SCC follows the principle of territoriality and, thus, applies to individuals notwithstanding their nationality or resident status if they commit a crime in the Swiss territory. Money laundering in Switzerland can also occur if the predicate offence was committed abroad, provided that it is also liable to prosecution at the place of commission (article 305-bis(3), SCC).