Swiss gold exports to India cross record Rs 70,000 crore level – Times of India u s anti money laundering laws

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u s anti money laundering laws

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NEW DELHI/BERNE: as banks in switzerland come under greater black money scrutiny, the quantum of gold having left swiss shores for india so far this year has reached a record high level of over 11 billion swiss francs (about rs 70,000 crore).

The gold exports from switzerland to india stood at over 2.2 billion swiss francs (about rs 15,000 crore) in september alone, which is double the figure for the previous month, shows latest data released by swiss customs administration.

As a result, the total swiss gold exports to india since january this year has grown to 11.4 billion swiss francs, shows the data compiled by the swiss government’s cross-border trade monitoring agency.

While industry watchers attribute the surge during september partly to increased demand for the yellow metal ahead of diwali and other festivals in india, the sudden spike is also being seen suspiciously in the backdrop of gold being used for ‘layering’ purposes to move funds from swiss banks amid growing scrutiny for suspected black money.U s anti money laundering laws

According to banking industry sources, banks operating in switzerland, including those headquartered in the alpine nation and the swiss units of other european banks, have turned wary about dealing with their indian clients in the wake of a growing scrutiny of such accounts.

A number of swiss banks, including three with significant global presence, have begun telling their indian clients to sign undertakings that are aimed at ‘derisking’ the banking institutions from potential risks arising out of regulatory actions against the bank customers by foreign governments.

Some banks are also telling their clients to close their accounts if they are not ready to take such risks, or if they have apprehensions about such accounts not being compliant to regulatory requirements in their home countries.

Through these ‘derisking’ undertakings, the customer agrees to take responsibility for any possible regulatory or administrative compliance with international norms.U s anti money laundering laws

At the same time, the bankers are also lobbying with the swiss government to ensure that any information would be shared with their indian counterpart about accounts held in swiss banks only after necessary provisions are made to safeguard the interest of the concerned banking institution.

Following a high-level delegation visit from india, switzerland recently agreed to cooperate on matters related to verification of genuineness of accounts and reply to requests for banking account details in a time-bound manner, and also to initiate a process to include india among the countries eligible for ‘automatic exchange of information’.

While banks try to put in place necessary safeguards, there are apprehensions that many of their clients are being advised to move the funds through gold and other routes.

As per swiss government data, the total exports of gold, silver and coins from switzerland stood at 347 tonnes (worth 6.62 billion swiss francs) in september.U s anti money laundering laws this included gold exports totalling 172.5 tonnes or 6.48 billion swiss francs.

In comparison, switzerland’s total gold exports stood at just about three billion swiss francs (80.6 tonnes) in august, while the overall figure for gold, silver and coins stood at 3.16 billion francs (237 tonnes) in that month.

India alone accounted for total bullion exports worth 66.5 tonnes from switzerland, which mostly comprised of gold (over 58 tonnes or over 2.2 billion swiss francs) in september.

The total gold exports to india stood at 29.5 tonnes (1.12 billion swiss francs) in august, while the figure for july was 21 tonnes (792 million swiss francs).

In january, the total swiss gold exports to india stood at about 27 tonnes (970 million swiss francs), while it was in the range of 30 tonnes a month between february to may before surging to over 44 tonnes (1.62 billion swiss francs) in june.U s anti money laundering laws

A new strategy of ‘layering’ through gold and diamond trade came to light earlier this year at swiss banks to thwart any attempt for identification of real beneficiary owners of funds entrusted with them, government and banking sources have said.

There is a growing suspicion that a portion of gold and diamond trade is being used to route funds from swiss banks to india and other destinations.

‘layering’ is a key stage in money laundering and involves moving illicit funds around financial system through a complex series of deals to complicate the paper trail.

This layering typically takes place between the first stage — placement of black money in the financial system either in cash vaults, or through a series of cash or sham financial transactions — and before the final ‘integration’ stage when money is put back into the financial system through various transactions for the benefit of its final recipient.U s anti money laundering laws

Under global pressure, switzerland agreed earlier this year to provide country-wise breakdown of its gold trade.