Money Mover Country Report - Switzerland
Posted on the 6th November 2016 by Emily Keates in Country Reports
Switzerland
Covered by glaciers during the Ice Age, Switzerland was colonised relatively recently compared to its neighbours. The first group to identifiably inhabit what is now Switzerland being the Celts in around 100 BC. Since then, until its independence in 1815, it has been fought over by the Romans, ‘Barbarians’ and French.
Traditionally perceived as reluctant to join supranational bodies, Switzerland has never joined the EU, although it was a founding member of the (European Free Trade Area) EFTA and thus is part of the single market. It also became a member of the United Nations in 2002.
The Swiss Franc
Prior to the introduction of the Swiss Franc (SFr. / CHF), the monetary system in Switzerland was extremely complicated. Only 15% of the money in circulation was locally produced and even private banks issued their own banknotes, the result was over 8000 different notes and coins being in circulation at that time.
In May 1850 the Swiss Franc became recognised as Switzerland’s official currency, replacing the different currencies of each district.
While Switzerland is not part of the European Union and thus is not obliged to convert to the Euro, many prices are indicated in both Euros and Francs so that tourists can compare prices.
Political situation
Switzerland has a long republican tradition. Its modern democratic constitution dates back to 1848 with the Swiss Federal Constitution, which is among the oldest constitutions in the world. It is the closest state in the world to a direct democracy (in which people decide policy initiatives directly). For any change in the constitution a referendum is mandatory, and for any change in a law a citizen can request a referendum if that person is able to gather 50,000 signatures against the law within 100 days. If successful in gathering enough signatures, the law is decided by a simple majority vote.
The federal constitution defined Switzerland as a federal state composed of 26 cantons (20 cantons and 6 half cantons).
Swiss parliament consists of two houses, the Council of States and the National Council, which makes up the Federal Assembly. The Council of States, considered the upper-house out of the two, has 46 representatives (two for each canton and one for each half-canton) who are elected by the citizens of each canton respectively to represent them. The National Council consists of 200 members who are elected under a system of proportional representation.
The Federal Assembly possesses the federal government's legislative power, along with the separate constitutional right of citizen's initiative. For a law to pass, it must be passed by both houses.
Since 1959, the four largest parties have formed a coalition government. This includes the Swiss People’s Party, the Social Democratic Party of Switzerland, FDP.The Liberals and the Christian Democratic People's Party of Switzerland.
Trade and industry
With a highly skilled workforce, a strong service sector and low unemployment rates, Switzerland has one of the most stable economies in the world. The vast majority of the working population is employed within the tertiary sector of the economy and a large proportion of GDP comes from their very large financial industry. Seen as a safe haven for investors it is heavily dependent on foreign investment with over CHF 750bn of foreign direct investment in 2014.
Switzerland ranks number 1 in the Global Innovation Index (a ranking of countries by their capacity for and success in innovation), and rightly so. Switzerland has a history of prolific inventors and inventions – Velcro, DNA, chocolate, programming language, and bobsleigh all having their existence thanks to people from Switzerland.
AML & CTF (Anti-Money Laundering and Countering Terrorist Financing)
Switzerland has been a member of the FATF (Financial Action Task Force) since 1990.
Switzerland was last evaluated by the FATF in 2006, which determined that:
- As Switzerland is an international financial services centre of the first order, the main source of criminal proceeds is from economic crime.
- Financing of terrorism is not an area of large concern, as no trends or issues relating to this area are apparent.
- On average, since the introduction of the Money Laundering Law for the non-banking sector, there have been on average 100 convictions a year.
- Switzerland has an adequate financial intelligence unit, which deals with reports relating to money laundering and terrorist financing.
Corruption
According to the latest Corruption Perceptions Index, Switzerland scores a mid point score of 86 out of 100 (0 being highly corrupt and 100 representing a very clean perception), ranking it 7 out 167 countries and territories.
Business is not impeded by corruption in Switzerland. Communications with public officials are transparent, and corruption is not common to any particular public sector.
Money Mover view
Based on the latest Corruption Perceptions Index, Money Mover is happy to process Swiss Franc payments to Switzerland.
Our clients may wish to use our foreign exchange and international payments services for several different reasons such as:
- Transferring business revenues between branches in Switzerland and other countries
- The need to make payments to suppliers based in Switzerland
- Paying for a Skiing trip in the Swiss Alps
Other country reports you might be interested in:
- Money Mover Country Report - South Africa
- Money Mover Country Report - Spain
- The Challenges and Opportunities presented by Brexit