The Swiss parliament has approved plans for a new 'super regulator' which will bring the activities of three current regulatory bodies under one roof.
The new entity, to be known as the Federal Financial Market Supervisory Authority (Finma), will incorporate the roles currently played by the the Federal Banking Commission, the Federal Office of Private Insurance and the Money Laundering Control Authority (MLCA) and is due to begin operating from 2009 - one year later than planned.
The Swiss government designed the new regulator in response to criticism from international bodies of the shortcomings in the country's money laundering laws, and particularly the low number of money laundering reports being received by the MLCA compared with other major financial centres.
With 619 reports on suspicious financial transactions submitted to the Swiss Money Laundering Reporting Office Switzerland (MROS) in 2006, the number of reports received decreased 15.1%, from 729 in the previous year, according to the 9th MROS Annual Report 2006. As in the past few years, this decrease was due to a steady decline in the number of reports from the payment transaction services sector and in particular from the money transmitters, culminating in a substantial drop of 52.9% in 2006.
In its recent assessment of the Swiss economy, the International Monetary Fund (IMF) praised the Swiss government on its commitment to improving the supervision of the banking and financial sector, but raised concerns over the degree of autonomy that Finma will have from the government.
"The crucial importance of the Swiss financial sector to both the domestic economy and the global financial system — as well as its large size and increasing complexity — heighten the need for continued vigilance and for the highest standards of financial supervision," the report said. It went on to add that: "The Financial Market Supervisory Authority (FINMA), should be assured both financial and regulatory independence."
Speaking to Swissinfo, finance ministry spokesman Dieter Leutwyler rejected concerns over the independence of the new regulator.
"We do not share the concerns of the IMF in the field of independence, sanctions and costs of regulation," he said. "The independence of Finma is an important prerequisite for it to be able to fulfil its supervisory duties."
Swiss banking industry officials have expressed worries over the separation of powers within the new unitary authority, and have also questioned the overlap of powers and whether this will reduce the regulator's efficiency.
"There is a saying that if it ain't broke then don't fix it and I strongly believe in that. Regulation works very well in Switzerland so why change it?" Professor Hans Geiger of Zurich University's Swiss Banking Institute told swissinfo.
He added that the creation of Finma was, nevertheless, "absolutely necessary."