Switzerland is second only to Hong Kong in the use of controversial Panamanian law firm Mossack Fonseca.
According to Reuters, the warning comes from FINMA as Geneva’s chief prosecutor announced that he has opened a criminal probe following the leak of the nearly 11.5 million ‘Panama Papers’.
“The public prosecutor’s office is very attentive to these revelations,” Geneva’s chief prosecutor Olivier Jornot was quoted by the daily Tribune de Geneve as saying.
He declined to give any details.
Risks on the rise
Named among the documents are Swiss lenders UBS and Credit Suisse, identified as being among the banks most often requesting that offshore companies be set up for clients.
“The risk posed by money laundering is on the increase in Switzerland and banks need to do more to combat it,” FINMA chief executive Mark Branson said.
He added, however, that FINMA would first check whether there were indications of illegal activity before deciding whether to launch an investigation in connection with the leak.
Action being taken
The move by the Geneva prosecutor mirrors similar action being taken by the UK’s Financial Conduct Authority (FCA), which advised on Thursday that banks would have one week to declare any connection to Mossack Fonseca.
Panama’s president Juan Carlos Varela also announced that his government will create an international ‘panel of experts’ to help improve transparency in its offshore finance industry.
US beneficial ownership
The same day the Panama Papers leaked, the US Treasury coincidently began lobbying for federal legislation to force companies to declare beneficial ownership details to the Internal Revenue Service (IRS).
Having no state requirement to disclose beneficial ownership information is a “longstanding weakness” in the US’s anti-money laundering policy, admitted deputy assistant secretary Jennifer Fowler.
“We must ensure that companies know and disclose their ultimate, or beneficial, owners to the government at the time of company formation.
“Beneficial ownership information not only will help protect […] firms against the risk of involvement in illicit finance, it will also provide more useful information to law enforcement to pursue those who are engaged in money laundering, sanctions and tax evasion, proliferation finance, and terrorist financing.”
