Banks in Switzerland are anxious that the outflow of money from wealthy Russians due to sanctions does not spread to their other clients, Swissinfo reported last week.
According to the report, G7 countries, particularly the US, have questioned whether Switzerland is doing all it can to track Russian assets stashed away in bank vaults.
Swiss banks complain that on top of existing tax evasion and money laundering regulations, they now have to comply with US, EU, and UK sanctions. The situation is particularly complicated and challenging for banks with multiple branches abroad.
“Contradictions between sanctions regimes [of the US, EU, and UK] are repeatedly leading to major difficulties with implementation and unnecessary compliance risks,” Philipp Rickenbacher, the CEO of Julius Bar bank and president of the Swiss Wealth Management Association, was quoted as saying earlier.
The report said that Swiss sanctions against wealthy Russians and their businesses have forced them to move their money elsewhere, notably the UAE. Swiss private banks were anxious that the trend would spread to clients from other countries, the publication noted. Sources have previously told Reuters that Russian citizens have been moving their funds from Switzerland and the UK to Dubai after the two nations sanctioned Russia and threatened to freeze the assets of prominent Russian businesspeople and politicians.
Switzerland, which is not an EU member state and considers itself neutral with regard to foreign policy, at first adopted all the sanctions that the EU imposed on Russian citizens and companies, including asset freezes, in 2022. The government justified the move as an “extraordinary situation,” claiming that Swiss neutrality remains intact but “of course we stand on the side of Western values.”
After the Swiss decided to take part in the EU sanctions, it had no choice but to adopt the US sanctions as well, which have “extra-territorial reach due to the power of the dollar and US financial system,” the report said.
Swiss bankers reportedly argued that instead of neglectfully adopting these measures, the government should in the future actively seek to influence global sanctions packages in a way that suits its domestic agenda.
The report also pointed to the fact that there is no exact information about how much money wealthy Russians hold in the country. According to the Swiss Bankers Association estimates, the total could be around 150 billion Swiss francs ($170 billion), while the amount in offshore assets that are managed by Swiss banks could be $2.4 trillion.
“The sparse information on Russian assets in Switzerland suggests that the authorities are not active enough in looking for hidden assets of sanctioned persons,” Martin Hilti, the head of Transparency International Switzerland, told Swissinfo. “They should implement sanctions proactively by joining international task forces,” he argued.
Bern has so far rejected this type of international cooperation, arguing that Swiss sanctions already function perfectly well without joining the REPO task force (the Russian Elites, Proxies, and Oligarchs Task Force), established between the EU, G7, and Australia in March 2022.
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