The Agreement on the Swiss banks' code of conduct with regard to the exercise of due diligence (CDB) is a multilateral agreement. Under its framework, banks located in Switzerland have agreed with the Swiss Bankers Association to verify the identity of their contracting partners and, should there be any doubt, obtain from them a declaration of beneficial ownership with respect to the deposited assets. They have also agreed to refrain from providing any active assistance in the flight of capital or in tax evasion.
Compliance with the CDB is monitored by the supervisory board. In March 2002, the board published its activities report for the period January 1 1998 to June 30 2001.
According to the report, during that time the Supervisory Board determined that the CDB had been violated in 53 out of 61 cases. The majority of the violations consisted of violations of the duty to verify the identity of the client and to ascertain the beneficial owner. The proceeding in the case of domiciliary companies occupied a central position in this regard. In a total of 21 cases, the procedural rules foreseen under the CDB for the commencement of business relationships with domiciliary companies were not observed.
No violations were found based on active assistance in the flight of capital. This is, in particular, due to the fact that there are almost no countries that continue to impose currency restrictions.
In contrast, unlike in previous reporting periods - but as in the case of the preceding reporting period - the supervisory board only had to review isolated instances – namely, eight cases – in which it was forced to conclude that the provisions relating to tax evasion and similar acts had been violated.
In the case of serious violations of the duty of due diligence, the banks can be required to pay contractual fines in an amount of up to SFr 10 million ($6 million). By way of comparison, the maximum fine under the Money Laundering Act is SFr 200,000.
During the reporting period, the Supervisory Board - as in the past - was not required to exhaust the upper reaches of the range of fines. Nonetheless, an increase in the amount of fines could be noted. Whereas, in the preceding reporting period, contractual fines in excess of SFr 10,000 were imposed in only 13 cases, such fines were now imposed in 31 cases.