Ethics and governance in the European Financial centers

The UN Global Programme against Money Laundering has identified ten fundamental laws of money laundering which illustrate the underlying conditions under which money laundering is likely to flourish.

1. The more successful a money laundering apparatus is in imitating the patterns and behaviour of legitimate transactions, the less the likelihood of it being exposed.

2. The more deeply embedded illegal activites are within the legal economy and the less their institutional and functional separation, the more difficult it is to detect money laundering.

3. The lower the ratio of illegal to legal financial flows through any given business institution, the more difficult it is to detect money laundering.

4. The higher the ratio of illegal "services" to physical goods production in any economy, the more easily money laundering can be conducted in that economy.

5. The more the business structure of production and distribution of non-financial goods and services is dominated by small and independent firms or self-employed individuals, the more difficult the job of separating legal from illegal transactions.

6. The greater the facility of using cheques, credit cards and other non-cash instruments for effecting illegal financial transactions, the more difficult it is to detect money laundering.

7. The greater the degree of financial deregulation for legitimate transactions, the more difficult it is to trace and neutralize criminal money.

8. The lower the ratio of illegally to legally earned income entering any given economy from outside, the harder the job of separating criminal from legal money.

9. The greater the progress towards the financial services supermarket and the greater the degree to which all manner of financial services can be met within one integrated multi-divisional institution, the more difficult it is to detect money laundering.

10. The greater the contradiction between global operation and national regulation of financial markets, the more difficult the detection of money laundering.

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The SFBC (Swiss Federal Banking Commission) published recently the judgement of the Supreme Court of 9 February 2006 which among other deals with the territorial application of the Money Laundering Act, the consolidated supervision of bank groups and the due diligence obligations regarding higher risks relationships. The judgement will also be published in the SFBC Bulletin 49 to be released in autumn 2006.


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The World Bank and International Monetary Fund developed a unique Reference Guide to Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) in an effort to provide practical steps for countries implementing an AML/CFT regime in accordance with international standards. The Guide describes the global problem of money laundering and terrorist financing on the development agenda of individual countries and across regions. It explains the basic elements required to build an effective AML/CFT legal and institutional framework and summarizes the role of the World Bank and the International Monetary Fund in fighting money laundering and terrorist financing.


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