News 17 December 2014

Swiss law requires banks to monitor accounts of sports federation heads

The Swiss Federal Council passed a new law on 13 December that will re-classify heads of international sporting federations based in Switzerland as ‘politically-exposed persons’ (PEP). The law requires banks to closely monitor the accounts of heads of international sporting federations for any suspicious activity.

The law (13.106) implements the 2012 recommendations of the Financial Action Task Force (FATF), which are designed to combat money laundering and terrorist financing. The FATF defines a PEP as somebody ‘entrusted with a prominent public function’. As such, it recognises that many PEPs ‘are in positions that potentially can be abused for the purpose of committing money laundering (ML) offences and related predicate offences, including corruption and bribery’.

Due to this danger, FATF Recommendations 12 and 22 require countries to ensure that financial institutions and other professions implement measures to prevent ‘misuse of the financial system and non-financial businesses and professions by PEPs, and to detect such potential abuse if and when it occurs’. If Switzerland had not implemented the measures, it risked being blacklisted by the Organisation for Economic Cooperation and Development (OECD).

‘Banks will also have to closely monitor the accounts of members of the Federal Parliament, the Federal Council and international sporting federation officials’, read a statement. However, politicians balked at a proposal to ban cash payments of more than CHF100,000 (€83,300). Instead, people receiving cash payments greater than CHF100,000 will be required to identify the customer, keep a  record of the sale and clarify the background of any unusual transaction. There will also be an obligation to report the transaction if there is any evidence of criminality.

Switzerland also plans to introduce legislation making bribery and fraud in sport a criminal offence. Although bribery of public officials is currently illegal in Switzerland, private bribery is only punishable on demand, and then only if it is linked to an act of unfair economic competition.

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