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US sanctions enforcement is intensifying, pressuring Swiss banks like UBS to comply strictly with the Office of Foreign Assets Control (Ofac) regulations. Recent inquiries into former Credit Suisse Russian clients highlight the complexities of legal obligations and banking secrecy, as banks aim to avoid severe penalties while navigating a challenging relationship with US authorities. The situation raises concerns about the protection of potentially suspicious clients and the future of attorney-client privilege in Switzerland.
The US sanctions authority OFAC is investigating UBS over its dealings with Russian clients acquired through the Credit Suisse purchase, amid growing concerns about money laundering. UBS is reportedly cooperating and has begun blocking accounts with suspicious Russian assets, as the US intensifies pressure on Switzerland to address loopholes in its anti-money laundering laws. OFAC's frustration stems from the lack of transparency regarding beneficial ownership of assets, raising fears that Switzerland is being used to facilitate illegal funds.
The U.S. is targeting Swiss lawyers for alleged financial misconduct, raising concerns about double standards in regulatory practices. While Switzerland has made significant strides in compliance, the actions against two Zurich lawyers highlight the need for stricter due diligence obligations to maintain the country's reputation as a clean financial center. To avoid further disputes with U.S. authorities, Swiss Parliament should swiftly enact proposed legislation to address these issues and eliminate loopholes, ensuring that the financial sector remains competitive and transparent.
Zurich attorneys Andres Baumgartner and Fabio Delcò, recently sanctioned by the U.S. over the Russian invasion of Ukraine, claim they are victims of political scapegoating. They assert compliance with all laws and deny any wrongdoing, labeling U.S. accusations as defamatory. The lawyers argue that the sanctions undermine independent legal work in Switzerland and criticize the U.S. for misusing sanctions to exert control over international financial centers.
The U.S. has sanctioned two Zurich lawyers, Andres Baumgartner and Fabio Delcò, for facilitating illicit financial activities linked to Russian assets, including connections to Putin. Despite ongoing pressure, Swiss lawmakers have resisted tightening anti-money laundering laws, citing concerns over professional secrecy and the burden of new obligations. The U.S. ambassador has urged Switzerland to enhance its legal framework to prevent abuse for illegal financial activities, especially in light of the war in Ukraine.
The US Treasury has sanctioned two Swiss lawyers for allegedly helping Russian clients evade sanctions by creating companies and trusts. This action highlights concerns over loopholes in Swiss law that allow lawyers to operate without due diligence, facilitating illicit financial activities. The sanctions are part of a broader effort to disrupt networks supporting Russia's military operations amid ongoing international tensions.
Switzerland's Federal Council has opted not to adopt the EU's new sanctions requiring companies to ensure their foreign subsidiaries comply with restrictions against Russia, a decision criticized by the Social Democrats and the US ambassador. While supporting sanctions is essential, the proposed extraterritorial application is legally problematic and lacks effective enforcement mechanisms. Instead, Switzerland should focus on strengthening its own regulatory capabilities to monitor and address potential circumventions of sanctions within its territory.
Scott Miller
People
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