On 29th June 2001, the Control Committee of the National Council presented a report to the Federal Council entitled: "Execution problems in the implementation of the Money Laundering Act: Supervision of financial intermediaries in accordance with Art. 2 paragraph 3 MLA." The report is based on a thorough study of the prevailing situation. It identifies various problem areas and formulates recommendations for the attention of the Federal Council. These relate to:

• the organisation and resources of the control authority, i.e. the measures which need to be taken for it to be in a position to fully assume all of its duties within an acceptable timeframe;
  
  
• the issue of subordination under the MLA, namely transparency and communication in relation to the control authority's practices in executing the MLA;
  
  
• the introduction of rules on petty cases;
  
  
• the practices of the legal service, the legal process and the penalties for violations of the MLA;
  
  
• the review as to whether or not the advisory board continues to serve a purpose;
  
  
• the uniform approach of federal administration agencies involved in combating money laundering and
  
  
• the drafting of a concept to set out how positive achievements in the execution and implementation of the MLA could best be communicated.

The Federal Council essentially agrees with the recommendations of the Control Committee. The following outline shows that the measures – if not already carried out – will be implemented in the coming months.

Present situation with regard to implementation of the most important measures demanded

• As of 1st January 2001 the control authority was granted the status of a division. In autumn 2001 it was provided with a new management structure consisting of four sections and 25 full-time posts. As of 1st January 2002 the two remaining vacancies for posts as heads of section were filled. At the present time the control authority employs 21 staff, totalling 18.9 full-time positions.
  
  
• The review of the financial intermediaries subject to direct supervision by the control authority will be conducted by audit bodies accredited for work in the area of the MLA on the basis of detailed specifications. The list of accredited audit bodies will be published in January 2002. The control authority itself will take charge of the audits for the self-regulating bodies (SRBs). With the available resources it should be able to commence work in the first half of 2002.
  
  
• The processing of requests for direct supervision by the control authority is proceeding at full pace. The first permits were issued in December 2001. The work should be completed by the end of the summer.
  
  
• In order to resolve the question of subordination and to contribute to the security of the law, the control authority wishes to publish a circular by spring at the latest in which it sets out its interpretation of the general provisions of Art. 2 paragraph 3 of the MLA on the one hand and standardises the activities subject to the MLA. The control authority bases its interpretation of article 2 paragraph 3 MLA on the text and aims of the law, as well as definitions and examples cited by the international Financial Action Task Force on Money Laundering (FATF) and the risk of money laundering inherent in each activity.
  
  
• A working group was established under the chairmanship of the head of the control authority. Its role is to examine whether rules governing petty cases would be compatible with the MLA and the recommendations of the FATF, as well as whether the thresholds proper for a subordination can be determined. The results of this work will be released in the spring.
  
  
• As far as the practices of the law service and its procedures are concerned, an independent appeal body will be created which can be called upon to challenge decisions of the control authority. As a result, the previous problem of the legal service's multiple role as legal advisor, appeal body and prosecuting authority will be resolved.
  
  
• The advisory board was set up in January 2001 as an advisory body to consider questions of principle and strategy. It provided impulses of a very high standard on a variety of issues and significantly contributed to the normalisation of the situation at the control authority. The Federal Council therefore has little understanding for the criticism directed at this body, all the more so considering the board had barely had time to familiarise itself with the relevant dossiers. In light of the general situation and the consolidation of the situation at the control authority, the head of the Fed. Department of Finance has – with the agreement of the head of the Fed. Finance Administration, the new head of the Control Authority and the president and members of the board – nevertheless decided not to retain this body. Its last meeting took place on 6th December 2001. The expertise and knowledge of independent specialists will nonetheless continue to be indispensable in the future when dealing with certain fundamental aspects and strategy of the control authority. Such assistance will also be sought selectively through other channels.

Proper and purposeful implementation of the MLA

The decisions taken on the basis of the recommendations of the Control Committee's report of 29th June 2001, but also on the basis of the conclusions reached by the former Supreme Court Judge Karl Spühler in his administrative inquiry commissioned by the head of the Fed. Department of Finance, enabled the first series of FDF measures of November 2000 to be rounded out and hastened their realisation. The objective is and remains to implement the MLA properly and purposefully within an acceptable timeframe in the sense and spirit in which the legislators intended.

The Federal Council will follow the progress of this matter with particular attention in the coming months. If developments in the situation require it, the Federal Council will not hesitate to take any measures that may be necessary to ensure the objectives are achieved.

Further details:
Mrs Dina Balleyguier, Director of the Control Authority, Tel. (031) 322 68 50

18 January 2002