Money Laundering is the term Swiss banks apply to the act of concealing the origins of money earned through criminal activities.

In the Philippines, such are monies received from bribes, kickbacks, embezzlement, por diez porciento, blackmail, graft, illegal excessive commission, anomalous biddings, money earned through unmoderated greed, drug trafficking, trafficking of people. Once this money is in the pocket of the criminal, there will be activities to launder this illegal money unnoticed into legitimate business activities.

The Swiss Money Laundering Act (in force only in 1998) obliges all financial intermediaries (not only banks) to identify all clients and to establish the beneficial owners of the assets ("know your customer"). Finally, for more than 20 years now, banks in Switzerland have observed a "Due Diligence Agreement" which contains the "know your customer" rules. Further rules and regulations against money laundering are laid down in the Swiss Criminal Code and the Federal Banking Commission guidelines as recently as March of 1998.

Punam Mohandas tells us that Switzerland is the global leader in cross-border asset management.

The probability of a dictator or despot or one in a powerful position bringing his money into Switzerland is relatively high. Thus Switzerland is the only country in the world to have drawn up and implemented a detailed set of rules covering the treatment of assets belonging to politically-exposed individuals.

Swiss Bankers Association says finance is the most important sector of the Swiss economy, accounting for almost 15 percent of gross domestic product (GDP), 16 percent of total tax revenues, and providing some 200,000 skilled jobs, which represents five percent of the whole Swiss workforce.

A Swiss banker’s obligation to respect his clients’ privacy is not absolute. No protection is afforded to criminals.

In particular, there is a duty to provide information under the following circumstances:

• Civil proceedings (inheritance or divorce).

• Debt recovery and bankruptcies.

• Criminal proceedings, i.e. money laundering, association with a criminal organization, theft, tax fraud, blackmail, etc.

The Swiss banks are under no obligation to provide information to the tax authorities in connection with tax proceedings or an appeal.

However, the bank must provide information or supply documents in a case of tax evasion, or for an appeal if asked to do so by the client.

Switzerland assists the authorities of foreign countries, such as the Philippines, in criminal matters. This is in accordance with the 1983 Federal Law relating to International Mutual Assistance in Criminal Matters. This is based essentially on the principles of:

• Dual criminality: Swiss banks and courts will use coercive measures when the act being investigated by the court is punishable under the laws of both the requesting state and Switzerland.

• Speciality: Information obtained will be used for the criminal proceedings for which the assistance is provided.

• Proportionality: The assistance sought must be proportionate to the crime; proceedings may not adversely affect persons not involved.