Each year in April, the Money Laundering Reporting Office Switzerland (MROS) publishes an annual activity report to share its practices and observations with the financial community and the broader public. This executive summary provides a snapshot of the relevant messages extracted from the 2018 MROS report.
2018 was the third reporting year in a row where reporting volume hit record highs. The MROS received 6,126 SARs (suspicious activities reports) amounting to more than CHF 17.5 billion in reported assets. In two years, the number of SARs has more than doubled. It should be noted that 2,546 SARs from 2018 still have not been analyzed yet, so the number of cases forwarded may be even higher.
As illustrated below, the general trend in number of SARs continued to increase massively in 2018, with a 30% increase compared to the previous year.
A new calculation method for the proportion of SARs forwarded to the prosecution authorities was introduced in 2017. According to this method, 65.1% of the analyzed 4,125 SARs were forwarded to the prosecuting authorities (2017: 64.9%).
Not only the number of cases but also the total asset values have increased amounting to more than CHF 17.5 billion (in the previous record year of 2017: CHF 16.5 billion). However, the average in substantial assets involved in an SAR decreased compared to 2017 (more than CHF 2.8 million compared to CHF 3.5 million).
In 2018, the MROS received a total of 6,126 SARs in connection with money laundering or terrorism financing, an increase of over 30% compared to the previous year. Many SARs are related to international cases. Banks reported 88% of all SARs (5,440 cases, which is an increase of 1,178 from 2017).
Swiss law knows the right to report (Article 305ter(2)) and the duty to report (Article 9 AMLA). For the fourth time, the MROS received more voluntary SARs than mandatory ones. 3’147 (51%) SARs were voluntary and 2,979 (49%) SARs mandatory.
As mentioned already, the number of forwarded SARs has increased slightly to 65.1% (2017: 64.9%). The average percentage forwarded in the last 10 years is 74.2%.
According to the MROS, the reason why the percentage of forwarded SARs is practically unchanged is the partial revision of AMLA, which entered into force at the end of 2013 and granted the MROS additional investigative competencies.
This means that the MROS now has the ability to analyze SARs in greater detail, filtering out substantial suspicions thus providing the law enforcement agencies with qualitatively higher data. As such, the MROS acts as an important gatekeeper, allowing the prosecution authorities to focus on the truly important cases. Nevertheless, just because a case is not substantiated sufficiently initially does not mean that it disappears from the MROS’s radar. Should more corroborating information appear at a later date, the case may still be forwarded to the prosecuting authorities.
In 2018, practically all of the predicate offenses went up. For instance, the percentage of SARs involving bribery as suspected predicate offense increased sharply once again (2018: 1,639; 2017: 1,076), accounting for 27% of the total reporting volume.
At 20%, fraud came in second place with 1’253 SARs. Money laundering was in third place, with 826 SARs (18%). Over the years, the number of embezzlement cases has gone up steadily, and with 388 SARs, reached another peak.
Aggravated tax offences only became a misdemeanor in 2016 so the statistics do not reach as far back as for other predicate offenses. However, with 317 SARs in 2018, this misdemeanor has also experienced an increase of 116 SARs in comparison to 2017. The category criminal mismanagement as a predicate offence increased once more by 134 cases, accounting for nearly 7% of all SARs submitted.
The category media reports (i.e. if a person or company appears unfavorably in the media) (38%) headed the statistics in 2018 as the cause of most SARs. Once again, the category transaction monitoring (2018: 25%) was the second most frequent source triggering a SAR. The categories “information from third parties” and “information from the prosecution authorities”, based either on disclosure orders, confiscation orders or other types of information from the authorities together triggered 21% percent of SARs.
In 2018, 7% of SARs arose because someone wanted to open an account with suspicious funds and 3% arose due to cash transactions. The remaining 9% were caused by various other reasons, as well as tip-offs received from a business, an audit firm or a member of a board of directors.
In 2018, MROS received 132 SARs involving suspicions of terrorism financing. This is an increase of 81 SARs over the previous year. In 2018, 59 of the 132 suspected cases of terrorism financing received were stand-alone cases. Some cases are also interrelated. The largest of these interrelated cases alone generated 27 SARs.
Of the 132 SARs associated with suspected financing of terrorism, 30.4% were forwarded to the prosecution authorities.
In terms of asset value, 2018 was a regular year at CHF 31.4 million (2017: over CHF 10.4 million), considering the increased number of SARs. The SARs not only included cases relating to “Islamic State” and “Al Qaeda” and associated groups but also to other local terrorist groups from various regions of the world.
Of all the SARs, 88 SARs were submitted by banks, 32 SARs by payment service companies and the remainder by other types of financial intermediaries.
Foreign FIUs may request information or send the MROS information. The number of natural persons / legal entities subject to inquiries from foreign FIUs has risen sharply since 2017 to a total of 4’671. Enquiries from FIUs have therefore more than doubled since 2011 and stood at the highest ever level in 2018.
The MROS responded to 795 inquiries from 104 countries. In turn, it also received 424 tip-offs from 47 countries. In comparison to 2017, this is an increase of 44%.
Both the number of reported SARs as well as SARs that are still under investigation continue to expand significantly. However, the process and the tools used to report such high numbers of SARs are outdated (financial intermediaries, traders and authorities still need to send their suspicious transaction reports to MROS by fax or mail) and will have to undergo some changes.
Fedpol recognized this and agreed that this process needs to be accelerated. To get the ball rolling, it recently proposed a partial revision of the Ordinance on the Money Laundering Reporting Office. One of the ideas bandied about is the use of a new system that would allow reportings to be transmitted through an online portal, i.e. electronically. There are already several countries with major financial centers around the world, such as Germany, Liechtenstein, Luxembourg and the Netherlands, that already use this system. On the one hand, the introduction of such a system would clearly speed up the reporting process and on the other hand, the MROS would then also be at the height of international standards.
