AMLA Interpretation and application
Supervised and recognised institutions
Sanctions and measures
126.96.36.199 Type 1 lists
188.8.131.52 Type 2 lists
184.108.40.206 Private search engine
1. Economic sanctions
The economic sanctions imposed by the United Nations (UN) are
the most widespread international forms of reprisal. According
to the UN Charter, the Security Council is entitled to order the
use of economic measures against those who threaten or breach
the peace, or commit acts of aggression. Since 1990, Switzerland
also applies such sanctions. In fact, before Switzerland joined
the UN, it was already applying, of its own will, non-military
sanctions issued by resolutions of the Security Council. Since
its accession to the UN, Switzerland is obliged by international
public law to apply such sanction measures. By implementing measures
taken by the European Union (EU) against the Federal Republic
of Yugoslavia, Switzerland participated for the first time as
well in the application of economic sanctions issued by an international organisation other than the UN.
In Switzerland, the Federal Act on the Implementation of the International Sanctions (Embargo Act, EmbA; CC 946.231) is the legal basis for adopting coercive measures to implement sanctions issued by the UN, the OSCE (Organisation for Security and Cooperation in Europe), or the EU aiming to restore compliance with international public law, and in particular the respect of human rights. Such measures are adopted in the form of ordinances issued by the Federal Council.
If individuals, organisations, or groups covered by such sanctions are set out in name lists, these lists are usually annexed to the ordinances issued by the Federal Council. The State Secretariat for Economic Affairs (seco) of the Federal Department of Economic Affairs (DEA) is the competent authority for the implementation of such ordinances. In addition to the publication of these ordinances in the Classified Compilation of Federal Legislation, seco also makes them available on its website together with their respective annexes, and informs the public through press releases of any new ordinances on coercive measures, or of any changes made to existing ones. The press releases are available on the Internet and can be subscribed to in electronic format.
Economic sanctions often include financial sanctions, such as the freezing of financial assets and/or of economic resources, the prohibition of transactions, and an obligation to notify seco of frozen assets and other resources. Financial intermediaries have the obligation to remain informed, at all times, of sanctions in force, and must implement the coercive measures and the obligation to notify.
Currently, sanctions exist regarding persons and organisations with ties to Usama Bin Laden, the Al-Qaida Group or the Taliban ; to Iraq, Yugoslavia, Liberia, Myanmar (formerly Burma), Sierra Leone, Zimbabwe, Ivory Coast, Sudan and Democratic Republic of Congo, Uzbekistan, Belarus, certain persons in connection with the assassination of Rafik Hariri, Lebanon, the Democratic People’s Republic of Korea (North Korea) as well as sanctions regarding Iran. However, the sanctions issued against Sierra Leone do not include financial sanctions.
2. Measures relating to combating terrorist financing
2.1 Relevant resolutions of the UN Security Council and the UN name list
The international fight against terrorist financing is based on several resolutions of the UN Security Council. Worldwide, the implementation of these resolutions occurs through different mechanisms, namely economic sanctions (ref. fig. 1 above) or other instruments.
In October 1999, having established that the Taliban regime in Afghanistan supported terrorist activities, the UN Security Council decided in Resolution 1267 to impose economic sanctions (including financial sanctions) on this regime. These international sanctions against the Taliban were subsequently modified several times by complementary resolutions, in order to reflect the changed realities. Actually, these sanctions are no longer aimed at the Taliban as a group or Afghanistan, but at individuals and entities belonging or related to Usama Bin Laden, the Al-Qaida Group or the Taliban. Upon decision of the relevant Security Council Committee that was established through Resolution 1267 (today called the "Al-Qaida and Taliban Sanctions Committee"), these individuals and entities are added to a list maintained by this Committee. The UN member states are required to implement the sanctions imposed on these individuals and entities.
On 28 September 2001, the UN Security Council adopted a new and extensive resolution to combat terrorism - Resolution 1373 (2001). Among other things, this resolution imposes an obligation on states to take measures, such as freezing financial assets, against persons and entities engaging in terrorist activities or linked to terrorism. The resolution expressly underlines the importance of international collaboration for an efficient anti-terrorist movement.
Certain states and organisations, namely the United States, as
well as the European Union, produce their own lists of persons
and entities linked to terrorist activities, in accordance with
investigation results at their disposal. They then qualify these
persons and entities as "terrorists" and, in conformity
with the relevant UN resolutions, take measures against them,
of which the most common is the freezing of assets.
Certain states, in particular the United States, transmit their lists of terrorist persons and entities regularly to other states requesting them to act on these lists, i.e. to also consider the persons and entities mentioned as terrorists, and to take measures against them on the basis of the relevant UN resolutions, in particular to freeze their assets. As the transmitted lists are based on a decree issued by President Bush (Executive Order 13224 of 23 September 2001), they are commonly called "Bush lists". If the persons, or entities, in question belong, or are related, to Usama Bin Laden, the Al-Qaida Group or the Taliban, the lists are also transmitted, simultaneously or later, to the Al-Qaida and Taliban Sanctions Committee, in the event where the names are not yet included in the Committee's list.
2.3 Implementation of the name lists by Switzerland.
2.3.1 Implementation of the name lists by the UN
The list maintained by the Al-Qaida and Taliban Sanctions Committee is implemented as described above (fig.1, Economic Sanctions). Following Resolution 1267 of the UN Security Council, on 2 October 2002, the Federal Council issued an ordinance that instituted measures regarding the Taliban (Afghanistan). This ordinance was based on the Federal Constitution, as the Embargo Act did not yet exist. Subsequently, as the UN resolution was modified by new resolutions, the ordinance has repeatedly been modified accordingly, in order to reflect actual realities; today it is entitled "Ordinance on Measures Against Persons and Organisations with Ties to Usama Bin Laden, the Al-Qaida Group or the Taliban" (CC 946.203). The individuals and entities subjected to the measures set out in this ordinance are listed in its Annex 2. This annex is based on decisions made by the UN Al-Qaida and Taliban Sanctions Committee and is regularly up-dated. As soon as individuals or entities are added to Annex 2, the assets and economic resources belonging to or controlled by any of the natural or legal persons, groups or organisations, are frozen. From then on, it is prohibited to transfer assets to these persons, groups and organisations or to provide them otherwise with funds and/or economic resources, directly or indirectly.
Financial intermediaries who retain or manage assets, or who have knowledge of economic resources that presumably should be frozen, must notify them immediately to seco. The assets remain frozen until such time as the ordinance is modified respectively. Prior to releasing the assets, the matter should be discussed with seco.
In Switzerland, the manner in which the lists issued by the US
or the EU (as far as the latter's lists contain names which are
not already listed by the UN or the US) are dealt with, depends
on their type. There are two types of lists to be distinguished.
220.127.116.11 Type 1 lists
These lists contain names of natural and legal persons, as well
as entities susceptible of having ties to Usama Bin Laden, the
Al-Qaida Group or the Taliban. Therefore these names are also
submitted to the UN Al-Qaida and Taliban Sanctions Committee for
verification and subsequent integration into the Committee's name
list. After examination, the names are usually added to the name
list of the Committee. In accordance with Resolution 1267 and
its successor resolutions, all UN members are then obliged to
apply these sanctions with regard to the listed persons and entities.
According to the practice of the MLCA, business relationships with listed persons or entities are subject to a founded suspicion in the sense of Art. 9 AMLA ( English translation), i.e. the suspicion that the assets involved are related to money laundering, originate from a felony, or are at the disposal of a criminal organisation.
Consequently, the MLCA considers the following obligations incumbent on all financial intermediaries:
- to inspect without delay if they maintain business relationships with persons or entities named in the lists, or if one of these persons is the beneficial owner of assets placed or deposited with them;
- to report such business relationships without delay to the
MROS. In accordance with the AMLA prescriptions, customers in
question must not be informed of the report and their assets
must be frozen until the prosecuting authorities issue an injunction,
but for a maximum period of five working days (Art.
10 AMLA / English translation).
The report to MROS must be made independently of the compulsory notification to seco (ref. fig. 1 above, economic sanctions) following each modification to the Annex 2 of the Ordinance on Measures Against Persons and Organisations with Ties to Usama Bin Laden, the Al- Qaida Group or the Taliban. Thus the notification to seco must be made separately.
Chart of published Type 1 lists
These lists contain names of natural and legal persons and entities
susceptible of having a link to terrorist activities but that
do not have ties to Usama Bin Laden, the Al Qaida Group or to
Concerning type 2 lists, the MLCA considers the following obligations incumbent on all financial intermediaries:
- to inspect whether they maintain any business relationships with persons or entities names in the lists or if one of these persons is the beneficial owner of assets placed or deposited with them;
- to submit such business relationships to enhanced due diligence;
- to report such business relationships to the MROS, in the event where the overall assessment of the business relationships gives rise to a founded suspicion in the sense of Art. 9 AMLA. In accordance with the AMLA prescriptions, customers in question must not be informed of the report, and their assets must be frozen until the prosecuting authorities issue an injunction, but for a maximum period of five working days (Art. 10 AMLA).
Chart of published Type 2 lists
On its website, the SRO PolyReg provides a search
engine (click on heading: Sanktionen, Massnahmen des Bundes, sub-heading Namenssuche)
that is able to perform full text searches, in which entries of
the Bush lists published by the MLCA can be queried. This search
engine also contains the Annex 2 of the Ordinance of the Federal
Council on Measures Against Persons and Organisations with Ties
to Usama Bin Laden, the Al- Qaida Group, or the Taliban. The search
engine is regularly brought up to date, and indicates the last
update. If the search is successful, the search engine indicates
the Bush list, in which the inserted name can be found, and reproduces
the text of the listing.
The SRO PolyReg does not guarantee, however, that the presented
data is complete or exact. Although the search engine can be a
useful tool, only the lists published by the MLCA and seco are
authoritative. Consequently, in relation to the compliance with
due diligence obligations, the financial intermediary cannot argue
that he/she vainly searched for a name in the PolyReg search engine.
3. Measures of the Financial Action Task Force on Money Laundering (FATF)
The FATF (Financial Action Task Force on Money Laundering) is
an intergovernmental body. Its objective is to conceive and promote
strategies to combat money laundering and terrorist financing.
As member of the FATF, Switzerland participates in the implementation
of the FATF measures.
In connection with its initiative "Non-cooperative countries and territories (NCCTs)", the FATF has researched the weaknesses of the anti-money laundering systems of countries and territories with international financial centres, and particularly the financial offshore centres, by using 25 criteria. This permitted the FATF to identify countries and territories, the regulations and practices of which significantly infringed the fight against money laundering and the relevant international co-operation. The FATF then requested of the identified countries and territories that they adapt their systems to internationally recognised standards. The FATF then established a list of countries and territories with important flaws in their anti-money laundering instruments or a lack of willingness to cooperate in combating money laundering. Published for the first time in June 2000, the NCCT list is updated periodically by the FATF plenary meetings. All countries and territories that were previously listed have improved their systems and have been removed from the list.
According to the FATF Recommendation 21, financial intermediaries must pay particular attention to business relationships and transactions with natural and legal persons from countries and territories recorded in the NCCT list. In such cases, enhanced due diligence measures must be taken:
- Business relationships and transactions partially or fully executed through countries and territories of the NCCT list, or implicating natural or legal persons of such countries, are subject to the special obligation to clarify as per Art. 6 AMLA ( English translation)
The MLCA emphasises that financial intermediaries are therefore obliged to themselves seek informatin periodically on modifications made to the NCCT list, particularly following the trimestrial plenary meetings of the FATF in February, June and October. Furthermore, they must fulfil their obligation of enhanced due diligence when undertaking relations with natural and legal persons from one of the listed countries.
3.2 Obligations of financial intermediaries in connection with additional counter-measures of the FATF
If the flaws observed in the anti-money laundering system of
a non-cooperative country or territory persist, i.e. if no significant
improvements are to be noticed over a longer period of time, the
FATF will take a decision on applying additional counter-measures
that surpass those measures proposed in Recommendation 21.
In such cases, financial intermediaries are obliged to supervise their respective relations even more intently. On the one hand, they must always consider business relationships and transactions partially or fully executed through countries and territories of the NCCT list, or implicating natural or legal persons from these countries, as high-risk business relations and transactions. On the other hand, in addition to respecting the obligations set out under figure 3.1 above, financial intermediaries must also apply enhanced due diligence in cases of business relationships regarding natural and legal persons from, or whose residence, or headquarters, are in the country or territory concerned. The latter is particularly necessary when commencing new business relationships, in which case it is imperative to:
- proceed with an extended control and verification of the identity of the contracting partner and of the beneficial owner as per Art. 3 (English translation) and 4 AMLA ( English translation).
- systematically request confirmation relative to the beneficial owner's identity.
If the country or territory concerned realises great progress
with regard to anti-money laundering measures, the FATF can lift
the additional counter-measures. However, the country or territory
normally remains on the NCCT list until the new legislation is
implemented. In other words, the enhanced due diligence obligations
mentioned in figure 3.1 above are not lifted.
At the moment there are no longer any countries subjected to additional counter-measures.
Last update: 10.09.2007