The commodity trading industry represents a significant contribution to Switzerland’s GDP and plays a central role in international trade, to reconcile mismatches between global supply and demand in the most cost-effective way, as commodities are not necessarily readily available where the demand lies. Raw materials and natural resources play an important economic and fiscal role in both producing and trading countries. Revenues from the commodity sector represent a very significant economic opportunity for developing countries, not only to build infrastructure, but also to deliver public services.
Avoiding the risk of corruption
As a sector of significant strategic importance, the commodity trading industry may be exposed to corruption risks. This is due to the fact that most of the commodities are located in developing countries, which are very often marked by weak governance and public financial management systems and political instability. Corruption risks at the various stages of the commodity supply chain (including, where applicable, extraction, production, trade, storage, transportation, refining, sale) can significantly erode the benefits that developing countries could draw from their commodity sector to achieve development objectives.
The Financial Action Task Force (FATF) issues International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation (the FATF Recommendations), aimed at setting minimum standards for action in different countries, to ensure that Anti-money laundering/Counter-terrorist financing (AML/CTF) efforts are consistent internationally. Based on these international standards, national AML/CTF and anti-corruption (AC) regimes have been adopted by countries around the globe. A single, harmonised, global legal regime does not exist. Commodity trading companies therefore need to be up to date with and comply with the legal requirements which apply to their activities in the countries where they operate. In Switzerland, a company trading commodity on its own account is not subject to the Anti-Money Laundering Act.
Promoting responsible practices
Therefore, STSA has been developing non-binding Guidelines aimed at setting a benchmark for commodity trading companies operating from Switzerland when identifying AML/CTF/Anti-Corruption risks and conducting due diligence. Ultimately, these Guidelines, due to be published in 2022, aim to facilitate transactions in commodity trading (rather than hinder them) by encouraging responsible practices by all actors along the commodity value chain.
