Switzerland has long been a global financial hub, but its reputation as a bastion of corporate secrecy has drawn criticism from anti-corruption advocates. Recent efforts by the Swiss government to create a beneficial ownership register represent a significant step forward in combating money laundering and promoting transparency. However, Transparency International has raised concerns that proposed changes could weaken this initiative, undermining its effectiveness.
The importance of Beneficial Ownership registers
Beneficial ownership registers are critical tools in the fight against financial crime. They identify the ultimate owners of companies and legal entities, exposing opaque structures often used to hide illicit wealth. The Financial Action Task Force (FATF) has set global standards requiring member countries, including Switzerland, to implement such measures. While many European Union nations have already established public registers, Switzerland lags in this regard.
Transparency International has highlighted key weaknesses in Switzerland’s current proposal:
- Presumption of Correctness Clause: This provision allows corporate declarations to go unverified, potentially enabling fraudulent reporting.
- Limited Access: Restricting access to authorities and obliged entities excludes journalists and civil society organisations, who play a vital role in uncovering corruption and ensuring data accuracy.
Why public access matters
Transparency advocates argue that public access to beneficial ownership registers is essential. Experience from other jurisdictions shows that investigative journalists and NGOs often uncover discrepancies that authorities miss. The EU is moving towards greater public accessibility, setting an example Switzerland should follow.
Challenges with trusts and legal arrangements
Another gap in the Swiss proposal is its inadequate regulation of trusts and similar structures. Current measures require trustees to hold information privately and disclose it only upon request. This approach fails to address the opacity that facilitates financial crime.
A call for action
Switzerland must strengthen its beneficial ownership register by:
- Enforcing robust verification mechanisms to ensure data integrity.
- Expanding access to include legitimate actors like journalists and NGOs.
- Addressing loopholes related to trusts and other legal arrangements.
These improvements would align Switzerland with international best practices and enhance its ability to combat money laundering effectively.
