2.2.3 Switzerland
Switzerland being a member of the FATF, it implements the FATF recommendations. When imple-
menting the international standard, Switzerland historically had chosen the threshold approach, i.e.
defining all felonies" to be predicate offences to ML. The Swiss government therefore suggested ap-
plying the same threshold by introducing new felonies related to direct taxes and by expanding the
existing felony related to smuggling on all federal indirect taxes including VAT, levies, stamp duty
and the withholding tax."
The federal set-up of Switzerland causes the tax law to be fractured into 26 cantonal and several fed-
eral tax laws. The Swiss Confederation has no constitutional right to impose taxation on the cantons
other than for tax harmonisation purposes (see Art. 126 of the Federal Constitution"), hence the Fed-
eral Law on the harmonisation of communal and cantonal direct tax (draft Art. 59* para 1°“ being the
most important text) was the only mean to introduce new tax felonies below the federal level. At the
federal level, the proposed changes affected the Federal Law on direct federal taxation (draft Art. 186
1°
para being the most important text) and the Federal Law on administrative criminal law (draft Art.
14* para 4 being the most important text).
The results of public consultation of the draft bill showed such strong resistance against introducing
new felonies related to direct taxes" that the Swiss government chose the list approach for the first
time. This allows for the implementation of FATF recommendation 3 as part of the international stan-
dard on AML/CFT without further criminalising taxpayers on the national level. Direct tax fraud has
4! As defined in Art. 10 para 2 Criminal Code, felonies “... are offences that carry a custodial sentence of more
than three years”. The unofficial English translation of the Swiss Criminal Code is available from
https://www.admin.ch/opc/en/classified-compilation/19370083/201601010000/311.0.pdf, accessed on April 3,
2016.
#2 All legal texts (in German) can be found at https://www.admin.ch/ch/d/gg/pe/documents/2309/GAFI-
2012 Entwurf-BG de.pdf, accessed on April 3, 2016. For the sake of shortness of this text, this draft law that
never came into force can be found in Annex A below.
2 Available in English from https://www.admin.ch/opc/en/classified-compilation/19995395/index.html, ac-
cessed on April 3, 2016.
^ Tax fraud.
* Tax fraud.
* Fraud on benefits and levies.
* See the report on the results of the public consultation (in German) available on
http://www.news.admin.ch/NSB Subscriber/message/attachments/31879.pdf, accessed on April 3, 2016.
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