Oligarch funds: pressure on Swiss lawyers is mounting

Arms exports, neutrality, sanctions: Switzerland is under international pressure on several fronts over its position on the war in Ukraine and its consequences. One profession traditionally focused on discretion has been in the spotlight recently: Swiss lawyers.

At the beginning of April, the ambassadors of the G7 countries warned in a letter to the Federal Council that Swiss lawyers could help to circumvent the sanctions. It is to be feared that “in their role as financial intermediaries” they will help to set up illegal financial structures and thus “disguise the traces of parked assets”.

An influential visitor from Washington this week also wanted to speak about Swiss lawyers: Secretary of State Brian Nelson, US President Joe Biden’s chief sanctions official. On Tuesday he met with representatives of the State Secretariat of Economic Affairs (Seco). According to Seco, the meeting “also addressed the problem of asset management by lawyers”.

Of course, the pressure from abroad on Swiss lawyers does not come as a complete surprise. Already in connection with the “Panama Papers” published in 2016, some local lawyers made negative headlines for setting up offshore constructions to hide money for sometimes criminal transactions.

Lawyers in parliament pulled Revision’s teeth

Not least for this reason, the Federal Council proposed a revision of the money laundering law in 2019. He wanted to introduce due diligence and audit obligations for lawyers and civil-law notaries. That is a long-standing demand of the Financial Action Task Force. The international body for combating money laundering and terrorist financing is best known by its French abbreviation Gafi.

But parliament wanted nothing to do with additional rules for lawyers – not least because the numerous lawyers in the National Council and the Council of States strongly opposed it. The then Minister of Finance, Ueli Maurer, spoke of a real “fireworks from the lawyers”. In the debate, he warned of a legal loophole that was denounced internationally: “If you say no now, it will just come back,” Maurer said.

The bourgeois parliamentary majority was not impressed by this. The revision adopted in March 2021 has remained the same: lawyers and notaries are only subject to money laundering legislation if they act as so-called “financial intermediaries”.

Simply put, this is the case if you have cash flows directly on behalf of a customer, for example as an authorized agent or director of a company. Then the legal secrecy applies, but the weaker protected confidentiality. Lawyers are not subject to the law if they act as advisers in the context of their professional activity – for example, when setting up complex business networks. Such activities are protected by the attorney-client privilege.

Between these two blocs is a gray area that stretches far across Switzerland, the emeritus professor of criminal law in Basel and corruption expert Mark Pieth told the “Handelzeitung” this week. That paralyzes the Seco in its search for hidden oligarch funds.

“We have an interest in keeping the attack area as small as possible,” Finance Minister Karin Keller-Sutter reminded notaries and lawyers in an interview with Tamedia in February.

Also under her predecessor Ueli Maurer, the Ministry of Finance (FDF) made a new attempt in October 2022 to regulate this gray area. It wants to develop a new template by the summer. This includes new measures to strengthen the anti-money laundering system, including adjustments for lawyers and civil-law notaries.

The US itself is not a role model

A certain openness is signaled this time by lawyer and Mitte faction leader Philipp Matthias Bregy, who opposed new regulations for his profession at the latest review. “If the Federal Council can credibly demonstrate where there are gaps in current legislation and how to close them without violating attorney-client privilege, we are open to targeted adjustments.” But Wallis emphasizes that Swiss money laundering rules are strict internationally and also apply to lawyers “once they get their hands on the money”.

Geneva lawyer and FDP national councilor Christian Lüscher describes the lawyer’s legal privilege as a “fundamental pillar of our rule of law”, which should not be dragged along under the guise of combating money laundering. Insofar as the lawyers act as financial intermediaries, the same money laundering rules apply to them as to other actors, he emphasizes.

The current legislation does not have to shy away from international comparison for the Swiss Bar Association either. Anyone who contradicts the international pressure and attitude of the Gafi must be able to demonstrate to what extent there is more effective regulation worldwide than in Switzerland and where the alleged gray areas and gaps lie.

GLP National Councilor Judith Bellaiche already argued for stricter rules in the latest revision. According to her, the Bar Association and its representatives in parliament are entering into a “retreat”. She understands that the profession opposes widespread accusations from abroad that all Swiss lawyers act as money laundering assistants. But stricter rules are still needed. Switzerland plays with its financial center on an international playing field: “Then we have to abide by its rules. You cannot play at the World Cup, but you want to play according to the rules of the regional competition.”

For all three parliamentarians questioned, the current pressures on Switzerland are not only objectively justified, but also an expression of power politics. This can be illustrated with a figure. Of the 40 Gafi recommendations, Switzerland fully or largely complies with 35, five only partially. The US, which is currently pushing hardest, is only partially complying with five recommendations – and four not at all.

(aargauerzeitung.ch)