3.5 Tax crime as predicate offence to Money Laundering and its effects on private
law
Financial institutions and DNFBPs prefer to avoid discovering existing non-tax-compliant clients at
the time tax crimes become predicate offences to ML, in order to avoid damaging their good reputa-
tion. This is why the reporting entities have conducted in-depth research and analysis in relation to
existing clients, aimed at finding the bad apples among their clients and consequently terminating
these existing business relationships.
But what are the consequences of tax crimes as predicate offences to ML on the opening procedure of
a business relationship? It certainly looks as if a self-certification of tax compliance by prospect clients
has become the minimum standard before opening a business relationship. But when facing situations
of enhanced due diligence, many banks and other financial institutions, but also DNFBPs, have al-
ready started to ask for more, e.g. a legal opinion, written confirmation of tax compliance by tax advi-
sors or event the prospect clients” consent to a simplified administrative assistance procedure even
before the account is opened. Such a far reaching form of consent is attached as Annex B.
What does it mean to ask a prospect client to waive his legal rights by consenting to a simplified ad-
ministrative assistance procedure even before the account is opened? Let's look at the example of
Switzerland. The Federal Act on International Administrative Assistance in Tax Matters (Tax Admin-
istrative Assistance Act, TAAA) knows two different types of procedures when sending requested
information to the requesting country, the ordinary procedure and the simplified procedure.
Under the terms of the ordinary procedure according to Art. 17 et seq. TAAA, the Federal Tax Author-
ity (FTA) shall serve each person entitled to appeal with the final decree stating why administrative
assistance is being provided and specifying the extent of the information to be transmitted. ^?
If a person entitled to appeal is resident abroad, the FTA shall notify him or her of the final decree by
sending it to the person authorised to accept service. If no such person has been designated, it shall
give notice of the decree by means of a publication in the Federal Gazette.'^*
At the same time, the FTA shall inform the cantonal tax administrations concerned of the issue and
content of the final decree.'®
103 Art. 17 para 1 TAAA, SR 651.1, available from https://www.admin.ch/opc/en/classified-
compilation/20110630/201408010000/651.1.pdf, accessed on April 3, 2016.
19 Art. 17 para 3 TAAA.
195 Art. 17 para 4 TAAA.
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