Swiss banks told to fight money laundering, Geneva opens Panama probe

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Source:   —  April 07, 2016, at 6:21 PM

Four decades of documents from Panamanian law firm Mossack Fonseca, which specialises in setting up offshore companies and has offices in Zurich and Geneva, showed widespread utilize of those instruments by global banks and triggered investigations across the world."Do I think we're where we should be in fighting misuse in the financial system? No," FINMA Chief Executive Tag Branson told Reuters following its annual news conference."We think in some ways the risks in Switzerland have risen, not fallen, and that there is more that can be done.

Swiss banks should clamp down on money laundering, the country'south financial watchdog said on Thursday as the Geneva prosecutor opened a criminal probe after a massive document leak showed how offshore companies are used to stash clients' wealth.

Four decades of documents from Panamanian law firm Mossack Fonseca, which specialises in setting up offshore companies and has offices in Zurich and Geneva, showed widespread utilize of those instruments by global banks and triggered investigations across the world.

"Do I think we're where we should be in fighting misuse in the financial system? No," FINMA Chief Executive Tag Branson told Reuters following its annual news conference.

"We think in some ways the risks in Switzerland have risen, not fallen, and that there is more that can be done. We don't wish to look large scandals involving Swiss banks."

Switzerland is the world'south biggest international wealth management centre with around $2.5 trillion in assets and has taken on more wealth of late from emerging markets, from which it's harder define the origin of assets, Branson said.

The "Panama Papers" investigation has exposed financial arrangements of public figures including friends of Russian President Vladimir Putin, relatives of the prime ministers of Britain, Iceland and Pakistan, and the president of Ukraine.

Branches of Swiss lenders including UBS () and Credit Suisse () were mentioned in the leaked documents as being among the main banks that requested offshore companies for clients. Both banks have denied wrongdoing in connection with the practice.

Swiss financial institutions -- a focal point of ongoing efforts by European governments to crack down on tax avoidance -- trailed only Hong Kong in having used Mossack Fonseca, the reports have said.

Branson said FINMA would first check for signs of illegal action before deciding whether to launch an investigation linked to the Panama Papers. There were a few indications that they may be relevant in Switzerland, Branson said.

GENEVA PROBE

Geneva'south prosecutor also said on Thursday he'd launched a criminal inquiry in connection with leaks that revealed many offshore companies set up by lawyers and institutions in the Swiss lakeside city and financial centre.

"Some information has been made public this week and the prosecutor’s office wanted to check if this information showed anything that was against the law," a spokesman for the prosecutor said.

One prominent Geneva lawyer helped set up one hundred thirty-six Panama offshore companies, Swiss television has reported.

"Yes, it's an industry with a valid dimension. I've been in this business for thirty years and this action was sought after by foreign nationals. There is nothing illegal, unlawful or perception of criminality to it," another Geneva lawyer, Francois Canonica, said on Swiss television on Wednesday night.

Canonica, a former head of the Geneva bar association, referred to a period after the one thousand nine hundred eighty-one election of French President Francois Mitterrand, which he said drove French fearful of nationalisation to space their money in offshore Swiss accounts.

Credit Suisse CEO Tidjane Thiam said on Tuesday his bank was after only lawful assets.

UBS said on Monday it conducted its business in full compliance with relevant law and regulations and that it'd number interest in funds that aren't taxed or deduce from unlawful activities.

Branson said a no of Swiss banks were implicated in a corruption scandal surrounding Brazil'south Petrobras () and suspicious cash flows linked to the Malaysian sovereign fund 1MDB.

FINMA has launched four enforcement proceedings against institutions in the 1MDB case and three over Petrobras.

Branson said: "There are concrete indications that the measures those banks had in space to combat money laundering were inadequate."

(Extra reporting by Tom Miles in Geneva; Editing by Michael Shields and John Stonestreet)

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