Lugano around 1980: a financial centre without a money laundering offence

The third financial centre after Chiasso

By the end of the 1970s Lugano had become, in the words of the Ticino bankers' association, "la terza piazza finanziaria svizzera, dopo Zurigo e Ginevra", a position built above all in the 1960s and 1970s.¹ Chapter D.II describes how this happened: Italian savers and companies, worried about inflation, taxes, political instability and the currency controls of the Italian Republic, sent cash and securities across the border to banks that spoke their language and were a short drive from Milan. The spalloni, couriers who carried banknotes on foot or by car across the Mendrisiotto and the lakes, were part of the folklore of the border. Ticino's banks counted the deposits, managed the portfolios and kept the clients' names behind Article 47 of the Banking Act, which since 1934 had made the breach of banking secrecy a criminal offence (Chapter D.I).²

The Chiasso scandal of 1977 had shown how fragile this model could be. The Chiasso branch of Credit Suisse had channelled Italian client money through the Liechtenstein entity Texon Finanzanstalt into Italian companies, with losses of about CHF 2.2 billion. Chapter D.III describes the case and its main legal consequence, the "Agreement on the observance of care in the acceptance of funds and on the practice of banking secrecy" concluded in 1977 between the Swiss National Bank and the Swiss Bankers Association (Vereinbarung über die Sorgfaltspflicht, VSB, often abbreviated CDB 77 in English and Italian).³ The agreement obliged banks to verify the identity of their contracting partners and, in doubtful cases, of the beneficial owner. It prohibited active assistance in capital flight and tax evasion and was enforced by a private arbitration board with contractual penalties. The Federal Council later wrote that the agreement had done "gute Dienste" as a rapid remedy in a crisis.⁴

What the law did not cover

For all its merits, the agreement of 1977 was a private contract among banks. It did not bind fiduciaries, lawyers acting as asset managers, currency dealers, gold traders or the many small finance companies that operated in Lugano and Chiasso outside the banking licence. It created no criminal offence. The Swiss Criminal Code of 1937 punished receiving stolen goods (Hehlerei, then Article 144 SCC) and obstruction of criminal proceedings (Begünstigung, Article 305 SCC). Neither provision fitted the conduct of a banker who accepted a suitcase of dollars, changed them into Swiss francs and transferred the money onwards to an account in another name. Receiving required property obtained by an offence against property. Obstruction of criminal proceedings protected a person from prosecution, which did not extend to assets.⁵ As a result, the person who helped a heroin trafficker to place, convert and move his proceeds was punishable only if he could be shown to have participated in the drug trade itself, for example under the Narcotics Act as an accessory to financing.

Two further gaps mattered. Switzerland had no offence of participation in a criminal organization, which made it hard to prosecute the financial wing of a Mafia family as such, and its confiscation law, then contained in Article 58 and the following articles of the Criminal Code, still awaited reform. The Federal Council observed in 1989 that confiscation came closer than the offence of receiving to the aim of depriving organized crime of its working capital and proceeds, but the comprehensive revision intended to secure efficient access to criminally acquired assets came only in 1994.⁶ Mutual assistance in criminal matters, finally, was governed by the European Convention on Mutual Assistance in Criminal Matters of 1959 and, from 1983, by the new Federal Act on International Mutual Assistance in Criminal Matters (IMAC) of 20 March 1981. Both excluded assistance for fiscal offences and for violations of currency regulations, which in the eyes of Swiss law were the main reason why Italian money came to Lugano.⁷

Notes

1. Associazione Bancaria Ticinese, "Cenni storici", https://www.abti.ch/cenni-storici (the Lugano financial centre "risale al Secondo dopoguerra e in particolare agli anni Sessanta e Settanta"). ↩
2. Federal Act on Banks and Savings Banks of 8 November 1934 (Banking Act, BankA), SR 952.0, Art. 47. See Chapter D.I for the origins of the provision. ↩
3. Federal Council, Botschaft über die Änderung des Schweizerischen Strafgesetzbuches (Gesetzgebung über Geldwäscherei und mangelnde Sorgfalt bei Geldgeschäften) of 12 June 1989, BBl 1989 II 1061, at 1067 ("Vereinbarung über die Sorgfaltspflicht bei der Entgegennahme von Geldern und über die Handhabung des Bankgeheimnisses", 9 December 1977 to 30 September 1987), https://www.finma.ch/FinmaArchiv/gwg/d/dokumentationen/gesetze_und_regulierung/ bundesgesetzgebung/PDF/Botschaft_Aenderung_StGB1989_d.pdf. The message gives 9 December 1977 for the agreement, whereas the Federal Banking Commission's annual report for 1977 dates its conclusion to 2 June 1977 and its entry into force to 1 July 1977 (Chapter D.III). The figure for the Chiasso losses is discussed in Chapter D.III. ↩
4. Botschaft of 12 June 1989 (as above), 1067 ("Die VSB hat als rasche Abhilfe in der Situation der Krise gute Dienste geleistet"). ↩
5. Botschaft of 12 June 1989 (as above), 1069–1070 (receiving under Art. 144 SCC "setzt ein Vermögensdelikt als Vortat voraus" and was possible only for corporeal things; Art. 305 SCC was "alleine auf die Personenbegünstigung ausgerichtet"; Swiss law had no equivalent of the German Sachbegünstigung). ↩
6. Botschaft of 12 June 1989 (as above), 1070 ("Die Einziehung [...] kommt dem Anliegen, dem organisierten Verbrechen Betriebskapital und Erträge zu entziehen, wesentlich näher als der Straftatbestand der Hehlerei"); Swiss Parliament, Rückblick auf die 44. Legislaturperiode, business 93.058, https://www.parlament.ch/Poly/Rueckblick/D/Retro01/93058.HTM ("Die Revision des Einziehungsrechts (Art. 58ff.) soll einen effizienten Zugriff auf deliktisch erworbene Vermögenswerte gewährleisten"). The revision is treated below. ↩
7. Federal Act on International Mutual Assistance in Criminal Matters of 20 March 1981 (Mutual Assistance Act, IMAC), SR 351.1, Art. 3(3), https://www.droit-bilingue.ch/en-de/3/35/351.1-3-7.html (exclusion of offences aimed at reducing fiscal duties or violating currency, trade or economic measures). Art. 112 IMAC, https://www.droit-bilingue.ch/en-de/3/35/351.1-112-160.html (commencement date 1 January 1983, Federal Council decree of 24 February 1982). ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.