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posted on 07 July 2015

The FIFA Scandal and Possible Effects on Swiss Banking Regulations

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As more information comes out regarding FIFA's recent corruption scandal the problem becomes deeper and more complex than ever thought. Out of the 104 bank accounts probed, 53 were related to bribes and money laundering.

These Swiss banks were cooperative in handing over information and allowing authorities to do their job - though other organizations, such as MROS (Money Laundering Reporting Office Switzerland), have claimed they did not do enough to prevent this incident in the first place. Around $150 million in bribes and money laundering has been found so far, and investigations are still ongoing. This amount stated mainly includes the 2010 FIFA World Cup selection and the 2011 FIFA presidential election. Swiss authorities have recently opened investigations into the host election for both the 2018 and 2022 World Cups so this amount is likely to continue to rise.

Considering the magnitude of the issue and the concentration within Swiss Banks, the US has claimed too many loopholes exist within the Swiss system that make it too easy to perform illicit activities. Stiliano Ordolli (shown below), the head of MROS, said that while banks have the opportunity to report any concerns about this sort of activity, it is mostly up to the bank when to do so. He has noted, however, that reports are becoming more common as awareness of the problem grows.

This whole story seems to be a further push for Swiss banks to become a more closed system and more tightly regulated. While Switzerland is a rich country and considered a haven for the fortunes of many, political pressure around Europe and the US has forced them to change their laws. Almost half of Switzerland's imports come from Germany, Italy, and France. Had they refused change and lost favor in Europe, it could cause huge economic setbacks for its citizens, especially on imported goods. The US also forced Swiss banks to hand over information regarding taxes and accounts in recent years, which was previously avoided by the banks. Had they not complied they risked losing their ability to do transactions on Wall Street, hence not allowing them to work with the US dollar. If this had occurred Swiss banks would have been prevented from doing business with not only US banks, but also many others around the world that deal in the US dollar. The FIFA corruption scandal is simply another reason for many to push Switzerland to tighten down on banking regulations to prevent money laundering and illicit activities such as these to take place. While it goes against what the Swiss have stood against for so long, to participate in a global market one must obey global rules.

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