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have gone further in terms of liberalization of cross-border supply, by expanding the sectoral coverage of commitments made under mode 1 for banking and other financial services (excluding insurance).34 In the case of insurance, however, commitments on cross-border supply remain limited to marine, aviation, and transport (MAT); reinsurance; and auxiliary services (as stipulated in the Understanding).
Switzerland and Liechtenstein are parties to the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds of Crime (Strasbourg Convention of 8 November 1990), as well as the UN Convention against Transnational Organized Crime (Palermo Convention of 15 November 2000) and the 1999 International Convention for the Suppression of the Financing of Terrorism. Both countries also supports the United Nations Global Programme against Money Laundering. While Switzerland is a member of the Financial Action Task Force (FATF), Liechtenstein participates in the Select Committee of Experts on the Evaluation of Anti-Money-Laundering Measures (also known as Moneyval).35
(a) Banking and fund management services
Switzerland is one the most important financial centres in the world, attracting high volumes of foreign business. This is largely the result of political, economic, and social stability, prudent monetary management, a liberal regime on capital movements, and a tradition of bank secrecy. The Swiss franc is the world's fifth most important reserve currency.36 Furthermore, due to low Swiss interest rates, bond issuance in Swiss francs is an attractive option even for non-Swiss borrowers. Switzerland has a universal banking system; thus, securities and investment fund activities are also dominated by banks. Private banking is by far the most important subsector, and Switzerland is the world leader in cross-border private banking. At end 2007, Swiss banks managed customer deposits totalling Sw F 5,235 billion for domestic and international clients.
At end 2007, Switzerland's banking system consisted of 330 banks (Table IV.9). The two biggest banks, UBS and Credit Suisse, rank among the world's top ten financial institutions.
Banking activities are mainly regulated by the Banking Law and the Banking Ordinance.37 To obtain a licence from the Swiss Federal Banking Commission (SFBC), a bank must provide evidence of clearly defined business, adequate organization, and good reputation of the managers; the latter must be domiciled in a place allowing them to ensure "responsible management". Natural persons or legal entities holding, directly or indirectly, 10% or more of the capital or voting rights, or who otherwise significantly influence the bank (qualified participation), must guarantee that their influence will not adversely affect the bank's activity. They must notify the SFBC before acquiring or selling a qualified participation or when their participation crosses (upwards or downwards) the threshold of 20%, 33% or 50%. The minimum, fully paid-up share capital is Sw F 10 million.38
34 A footnote to mode 1 commitments for Banking and Other Financial Services (excluding insurance) states: "Are covered not only transactions indicated in paragraph B.3 of the 'Understanding' but the whole range of banking and other financial services transactions (excluding insurance)."
35 The role of Moneyval is to evaluate the implementation of both FATF recommendations and the provisions of the Strasbourg Convention for members of the Council of Europe that are not members of FATF.
36 IMF online information, "Currency Composition of Official Foreign Exchange Reserves". Viewed at: http://www.imf.org/external/np/sta/cofer/eng/cofer.pdf [2 July 2008]
37 RS 952.0, as amended; and RS 952.02, as amended.
38 Article 4 of RS 952.02.