Black money

EYES WIDE OPEN - Iris Gonzales (The Philippine Star) - March 4, 2019 - 12:00am

ZURICH – Here you can almost smell the scent of money, my local guide tells me in jest.

We are right in the heart of Paradeplatz, the seat of the two banking giants here in Switzerland, UBS, and Credit Suisse. Scattered around the hulking grey buildings of the two banks are many private banks.

Zurich is touted as Switzerland’s financial capital and right in this square, we begin our talk about money laundering, my guide and I.

 ‘Grandfather of bank secrecy’

Along with its precise Swiss watches, succulent Swiss chocolates, and the picturesque Swiss Alps, Switzerland’s bank secrecy laws have also made it world famous, Daniel, my guide tells me.

Daniel said it was not uncommon to see people from all over the world casually walk inside Switzerland’s banks carrying leather suitcases filled with cold cash.

Black money from Manila and the world

However, things have changed significantly for some nationalities because of certain information-exchange treaties between their respective countries and Switzerland.

Unfortunately, this is not the case for everyone, including Filipinos and Indians.

This means that the Philippines and Switzerland do not have specific bilateral agreements for exchange of information insofar as offshore accounts of Filipinos are concerned, or at least those whose accounts have been flagged by the Anti-Money Laundering Council (AMLC).

In 2002, the Philippines and Switzerland signed a legal assistance treaty which allows for the exchange of information in criminal cases.

The treaty covers crimes such as terrorism, money laundering, and illegally acquired wealth, such as funds stashed away by former dictator Ferdinand Marcos. But I believe this treaty can be expanded to flag deposits of ordinary Filipinos that hit a certain threshold, similar to our banking laws in the Philippines.

I did some research and found out, indeed, that the fight against dirty money has improved significantly through the years.

But still, money laundering remains a major global crime around the world including the Philippines.

Laundering 101

Daniel explained to me the alibis used by some launderers. He said that with Switzerland sharing the border with Germany and France, launderers enter through any of these two countries or even other nearby Schengen States to avoid flight records to Switzerland itself.

Skiing the Alps

One of the common alibi is skiing, which Switzerland and its neighbors are famous for, so says my guide.

The lure of the Swiss Alps after all is unparalleled, making it a believable excuse for launderers.  They would actually go skiing for a few days, before or after they’ve visited their Swiss safety deposit boxes.

When I did some research on this, I learned that some Swiss banks with branches in some of the most popular ski resorts have built bunkers and storage facilities in their basements.

Banking in Switzerland traces its roots in the early 18th century as a result of booming merchant trade. It established bank secrecy laws to protect wealthy European banking interests in the early 1930s.

The protection of foreign accounts gained popularity during World War II. It was also believed that the Nazis kept the money of Jews in Swiss accounts.

Thus, Switzerland came to be known as the grandfather of bank secrecy. It has been one of the largest offshore financial centers and tax havens in the world since the mid-20th century.

Marcos era

But things have changed a lot since the late dictator Ferdinand Marcos’ hidden wealth put Switzerland on the global spotlight as a place to hide despots’ money.

Switzerland has definitely tightened its rules because of international pressure.

According to a 1998 article in The New York Times, some $500 million stashed in Swiss banks by the late dictator prompted reforms that make it harder for corrupt rulers and criminals to stow assets in Switzerland.

“Despots and crime barons, large and small, have deposited millions in Switzerland for decades without consequence for most. But the Marcos fortune was different because of its size and the embarrassment to the Swiss from the lengthy efforts of the country’s government to retrieve it,” the article said.

In all, it took 12 years for the Marcos money to be returned to the Philippines.

Switzerland instituted reforms and made money laundering a crime, the article also said. Banks were also obliged to scrutinize funds from foreign political figures. For instance, banks also had to take greater steps to ascertain the true owner of funds before accepting them for deposit.

But I believe our very own AMLC can widen the net, if it is able to flag Filipinos who deposit money in Switzerland. This is not impossible. A treaty that would cover such actions and for a certain threshold can make this work.

After all, it's not only Marcos who hid wealth here. I am sure – and I'm betting my stash of Swiss dark chocolates – that there are many other Filipinos who have done that and continue to do so.

Iris Gonzales’ email address is eyesgonzales@gmail.com. Follow her on Twitter @eyesgonzales.

MONEY LAUNDERING
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