BERN: Four years after new laws allowed them to clamp down on attempts to launder the proceeds of crime through secretive Swiss banks, Swiss officials are proclaiming that they are among the best in the world at tackling money laundering.

“We are at the forefront, and we want it to stay that way,” Finance Minister Kaspar Villiger told journalists at a recent seminar organized to expound the merits of the system that Switzerland set up in 1998.

Despite its reputation for banking secrecy, Villiger insisted that the country met “international best practices”.

In 1998, new legislation lifted a corner of the country’s legendary banking secrecy law by forcing banks to identify clients or financial beneficiaries of accounts, and to report suspicious transactions to authorities.

It took over from voluntary self-regulation by banks, setting up new surveillance bodies, a Money Laundering Reporting Office (MRO) and the Finance Ministry’s Control Authority, on top of existing banking, insurance and gaming regulators.

Although legal requests from abroad had already helped seize the proceeds of drug trafficking or accounts held by corrupt foreign politicians, the new law helped track down even more money, officials claim.

Yet, it was only in recent days that they have been able to boast of gaining control over thousands of middlemen, who are thought to have fuelled Switzerland’s reputation as a safe haven for financial crime.

“Our main risk is at the second or third stage of money laundering, where the financial intermediaries come into play,” Mark Pieth, an expert on financial crime from Basel University and consultant to the OECD, said.

New figures show that after years of struggling to get the non-banking intermediaries to apply the law, their reports of suspicious financial activity through Switzerland will help boost the overall number of reports by up to 50 per cent this year, from 417 in 2001.

“I don’t see fewer reports from banks, there are more year after year, and the proportion from non-banking financial intermediaries is increasing in a very significant manner,” Lorenzo Gerber, deputy head of the MRO, said.

Up to three-quarters of those reports involved “a foreign component”, and most are passed on for prosecution, he added.

The 1998 anti-money laundering law obliges intermediaries to make the same surveillance effort as banks, and has forced them to submit for the first time to some kind of regulation, either through a professional body, or by authorities.

After enduring years of criticism, the Swiss believe that their efforts and cooperation with the OECD are now recognised abroad.

Urs Zulauf, deputy director of the Federal Banking Commission, said foreign colleagues told him the situation in Switzerland had “changed dramatically”.

Yet, suspicion still surrounds Swiss banking secrecy in other areas.

The European Union is pressing its neighbour to tackle tax evasion through Swiss bank accounts, which is not regarded as a criminal offence under Swiss law. Officials also fear that the same networks involved in tax evasion are used for money laundering.

Nonetheless, Swiss regulators admit there are limits to their own system, especially to track down funds destined for terror groups.

“That is good money used for bad purposes, and the anti-money laundering system is aimed at the origins of the money, not its purpose,” Balleyguier said.

About 37 million Swiss francs (24.5 million dollars/euros) of suspected terror financing have been frozen in Switzerland.—AFP