Based on information provided by the US justice to the Geneva justice, a lawyer has been indicted for money-laundering activities and put in jail in early June. Being accused of having placed money for a client, who is a US convicted drug trafficker, he has been maintained in prison during the preliminary investigation of his case. Although he was not involved in the initial placement of funds ($5 million in total) in a financial trust which went fraudulently bankrupt in 1992, he acted on behalf of his US client to recover $1 million in the winding-up of the bankrupt company and placed the money in a separate account. Accessorily, he is further alleged to have intended to divert these assets as well as others, for his own benefit, for a total of $2.5 million.
The lawyer is now liable according to articles 305 ter and 305 bis of the Swiss criminal code, under the principle that it is difficult to pretend that he ignored his client's activities, the latter being in jail condemned to a life sentence since 1988.
This case illustrates that besides the well defined and advertised Guidelines and Agreement ruling the diligence duties of the banking industry regarding money-laundering offences (see our next article), these offences are primarily and specifically covered by the criminal law, which applies indistinctly to all professions and all individuals.
Whereas the Swiss economy, like every other, is susceptible to be affected by the money-laundering issue in all areas of its activities, the pressure and the demands for cooperation from the justice concentrate mainly on a limited number of professions. Where the banks have organized their auto-regulation and auto-monitoring, the other professions are left to interpret the meaning of "care appropriate to the circumstances" when it comes to verify the identity of the beneficial owner of funds. Clearly no profession is keen to get in the line of fire by over-organizing or advertising control, but woolly areas of knowledge or understanding of the law can make some professions more vulnerable to sudden and unexpected involvement.
The Swiss anti-money laundering law is made of 3 articles of the criminal code.
1. Article 305 bis, which relates to active money-laundering, says in essence that whoever undertakes an action tending to thwart the identification, the discovery, or the seizure of valuables which he knows, or must assume, stem from crime, will be punished with imprisonment or a fine. In serious cases (when the perpetrator is member of a criminal organization, or a gang formed specifically for money-laundering, or is a money-launderer by trade and for profit), the punishment will be up to 5 years penal servitude or imprisonment. This sentence will be combined with a fine up to 1 million Swiss francs. The law is also applicable if the main crime was committed in a foreign country provided it is also punishable where it was committed.
2. Article 305 ter deals with the lack of diligence of the professionals in the identification of their customers, "with care appropriate to the circumstances". Punishment is imprisonment for up to one year, attachment of assets or fine. In an amendment entered into force on August 1, 1994, the law also provides that the professionals have the right to report to the Swiss authorities competent for criminal prosecution and the federal authorities designated by law, their grounds for suspicion that assets originate from a criminal offence. It is important to note that, in this respect, Switzerland differs from most other members of the Vienna Convention, who have established by law an obligation to report suspicious transactions.
An amendment in this direction has been recently proposed to the Parliament but has been rejected and is presently re-drafted.
3. Article 59 governs the forfeiture of assets being the result of an offence, or the reward to commit the offence, or presumed to be under the control of criminal organizations. Assets belonging to members or persons who have brought their support to a criminal organization are deemed to be under the control of the organization. Forfeiture will not be ordered if the assets have been acquired in between by a third party, in good faith, for an adequate price or if ordering the forfeiture would cause excessive hardship to him. If the assets are no longer available, the Judge shall grant to the State a right to claim of an equivalent amount (if the estimation is difficult or would require disproportionate means, the Judge has the power to assess the assets himself), unless there is little hope of recovering the amount or if such measure severely hampers the rehabilitation of the interested party. In order to guarantee the payment of the claim, the investigating judge can also attach any other assets belonging to the interested party.
For any further information on this topic, please contact Deloitte & Touche SA, Geneva, Marie-Christine Chalon, Senior Manager in charge of Fraud Prevention and Fraud investigations (41-22-788 02 46).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
