ABA International 2009 Spring Meeting, Washington DC, 17 April 2009 Internet Gambling : Liability of...

ABA International 2009 Spring Meeting, Washington DC, 17 April 2009

Internet Gambling :Liability of the Banker in

Switzerland

Presented by

Saverio Lembo*, Attorney, Bär & Karrer SAGeneva, Switzerland

* In collaboration with Anne Valerie Julen Berthod, Attorney, Bär & Karrer SA, Geneva, Switzerland

2 www.baerkarrer.ch

Contents

I. Preamble

II. Money laundering : legal framework and analysis

III. Relationship between the right and the obligation to report

IV. Implications of a report

V. Banker’s liability

VI. Statistics

www.baerkarrer.ch

Internet Gambling Ltd Listed on LSE

X= CEO and shareholder

Account Liotard CALVIN Bank Geneva

Information at the disposal of the Bank:

•Press articles

•Indictments issued by DOJ

•Warrant against X

dividends $$$

I. Preamble

4 www.baerkarrer.ch

List of indicators

(FINMA Money Laundering Ordinance 1)

I. Preamble

5 www.baerkarrer.ch

Indicator A39

“Client of financial intermediary has been prosecuted for a criminal offense, corruption or embezzlement of public funds.”

I. Preamble

Business relationship presents a higher money laundering risk

Obligation of special clarification

6 www.baerkarrer.ch

Art. 305bis No. 1 Swiss Criminal Code (“SCC”)

“Whoever commits an act suited to frustrate the determination of the origin, the discovery or the confiscation of assets that he knows or should know derive from a crime, shall be punished with imprisonment or a fine.”

II. Money laundering :

legal framework and analysis

7 www.baerkarrer.ch

Analysis

• The perpetrator : anyone

• The offense : obstruction of the prosecution

high suspicion : use of off-shore companies and complex account activity

low suspicion : adequate identification of account holder and beneficial owner, no withdrawals

• The subject matter of the offense : proceeds from illicit activity (paper trail)



8 www.baerkarrer.ch

• The prior offense : classified as a crime under Swiss law

- notion of crime : offenses punishable by a more than three years prison sentence (Art. 10 II SCC)

- relationship with other countries (dual criminality) situation under US law (racketeering conspiracy, scheme

to defraud by mail, tax evasion) situation under Swiss law (tax evasion, Federal Act on

lottery and professional betting, fraud?)

• The subjective element of the offense : willful participation



9 www.baerkarrer.ch

The obligation to report

• Art. 9 No. 1 Anti-Money Laundering Act (“AMLA”)

“A financial intermediary must immediately file a report with the Money Laundering Report Office as defined in Article 23 (“MROS”) if:

a. he knows or has reasonable grounds to suspect that assets involved in the business relationship:

1. are connected to an offence in terms of Article 260ter §1 or 305bis SCC, 2. derive from a crime,3. are subject to the power of disposal of a criminal organization, 4. are used to finance terrorism (Art. 260quinquies No. 1 SCC)

b. he interrupts the negotiations aiming to set up the business relationship in reason of reasonable doubts according to let. a.”

III. Relationship between

the right and the obligation to report

10 www.baerkarrer.ch

III. Relationship between

the right and the obligation to report

The right to report

• Art. 305ter No. 2 SCC :

“The persons envisaged in paragraph 1 (whoever professionally accepts, takes into custody, invests or helps to transfer assets belonging to a third party) are entitled to notify the Money Laundering Report Office of any indices leading to the suspicion that assets derived from a crime.”



• Freezing of the assets by the financial intermediary for maximum 5 working days

consequences on the management of the assets

• Prohibition to inform the client or any third parties that a report has been made for maximum 5 working days (Art. 10a AMLA)

what if the report is made by an asset manager?

• Exclusion of Liability (Art 11 AMLA)


• Competence of the MROS (Art. 23 AMLA)

• In case of no decision to maintain the freezing of the assets within 5 days, the freezing of the assets and the prohibition to inform stop (Art. 10 No. 2 AMLA)

• Databank GEWA of the MROS

access to this databank by the FIUs recognized by the Egmont Group

• Other criteria




Administrative law

• Art. 37 AMLA : violation of the reporting obligation

- willfully: fine up to CHF 500‘000.- - through negligence: fine up to CHF 150‘000.-

• Art. 29 to 37 FINMASA (Federal Act on the Swiss financial market supervisory authority) : prohibition from practicing a profession, confiscation, revocation of license

Civil law

• No civil liability in case of violation of the reporting obligation (ATF 134 III 529)



Criminal law

• Art. 305bis SCC : imprisonment up to 3 years or fine up to CHF 1’080’000.- (more severe punishment in serious cases)

• Art. 102 No. 2 SCC : criminal liability of companies

not through negligence possible civil liability (ATF 129 IV 322)

Private self control mechanisms

• For banks : penalty up to CHF 10’000’000.- (Art. 11 CDB 08)


VI. Statistics

+126(+36%)

476350 Total

+97 (+110%)

18588 Art. 305ter No. 2 SCC (right to report)

+29 (+11%)291262 Article 9 AMLA (obligation to report)

variationYear 2007Year 2006

Overview of MROS statistics 2007


VI. Statistics

621’531137’365 Middle amount (not transferred)

1’470’6591’418’281 Middle amount (transferred)

1’318’3921’158’803 Middle amount (total)

8.5%68’989’9132.5%22’802’604 Amount in the reports not transferred

91.5%747’094’61196.1%885’007’579 Amount in the reports transferred to criminal auth.

100%816’084’524100%921’248’716 Total amounts

Available amount of the assets at the time of the reports

percentAbsolute value

percentAbsolute value

2006200620072007

Overview of MROS statistics 2007


VI. Statistics

Home canton of reporting financial intermediary


Offices

GenevaBär & Karrer SA12, quai de la PosteCH-1211 Genève 11Tel. +41 (0)58 261 57 00Fax +41 (0)58 261 57 [email protected]

LuganoBär & Karrer SAVia Vegezzi 6CH-6901 LuganoTel. +41 (0)58 261 58 00Fax +41 (0)58 261 58 [email protected]

ZugBär & Karrer AGBaarerstrasse 8CH-6301 ZugTel. +41 (0)58 261 59 00Fax +41 (0)58 261 59 [email protected]

Internetwww.baerkarrer.ch

ZürichBär & Karrer AGBrandschenkestrasse 90CH-8027 ZürichTel. +41 (0)58 261 50 00Fax +41 (0)58 261 50 [email protected]

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