Maître Daniel Richard, who has been a member of the Geneva bar since 1977, is on his final lap. Aged 74, he began his career as a lawyer with grain trading giant Cargill and is now looking forward to a well-deserved retirement. But after decades of providing good and loyal service to a worldwide clientele from a variety of backgrounds, he has one last – and rather thankless – task to complete: liquidating Rosneft Trading SA (RTSA), a company he himself registered in January 2011, while working for leading Geneva law firm Python. He is now its sole administrator and the company is registered at the office of his firm PRLEX Avocats.

For a long time, RTSA – the Geneva subsidiary of the giant Russian oil trader Rosneft – was a thriving business, but it suddenly ceased trading in February 2020, after the United States imposed sanctions for breaching the embargo on Venezuelan oil decreed by Washington. The lawyer, who at the time was receiving an annual salary of 300,000 Swiss francs from the company, found himself liaising with UBS and Credit Suisse, which had blocked RTSA’s accounts, and supervising the implementation of a redundancy plan for around 40 employees who had lost their jobs. Things have become even more complicated since the Russian invasion of Ukraine: the Rosneft parent company has been sanctioned by countries in the West and liquidating RTSA could take several years because of the complexity of the case.

“I’ve dealt with the administration of RTSA from start to finish in accordance with local laws. It was one of the best jobs of my career!” 

says the lawyer, who also looked after several other companies belonging to the nebulous Rosneft, including TNK Trading International SA, which also faced US sanctions for the same reasons as RTSA (see our infographic on the Rosneft galaxy in Geneva). “I couldn’t abandon a client, whoever they may be. And in this particular case, it would be impossible, as no-one wants to take over,” he admits.

Playing multiple parts

Maître Richard belongs to that group of lawyers who, alongside their so-called “typical” activities of representing clients in court and offering legal advice, sell them a whole range of services which, in principle, have nothing to do with the profession to which they are bound by oath. The list is long, from setting up companies, foundations and trusts to dealing with their administrative needs, and buying and selling property. 

“Contrary to what people say, there is nothing non-typical about these activities,” retorts Daniel Richard, adding that while “French lawyers are known to be great criminal defence lawyers, Swiss lawyers have earned a reputation for company administration”. Also termed “advisers” in Switzerland, they are mainly men and have worked for decades in a particularly liberal environment. Unlike lawyers who act as financial intermediaries (who hold or help to transfer funds on behalf of their clients) they are not yet subject to the provisions of the Federal Anti-Money Laundering Act (AMLA).

This means that they are not, for example, obliged to explore the motivations of a wealthy individual who wants to buy a network of offshore companies, or question where their wealth has come from. Switzerland is exceptional in this respect, since their colleagues in most neighbouring countries – including Germany, France, Italy and Luxembourg – have long been obliged to carry out stringent checks. 

The Financial Action Task Force (FATF) began to ring the alarm bell in 2005, asking Switzerland to close the loophole. At the time, the international organisation responsible for implementing anti-money laundering standards described these “advisers” as “gatekeepers” providing access to the financial system. For better or worse, since legal professionals (lawyers and notaries), in particular, can provide complex set-ups that could be used to launder funds, causing the judicial systems in the countries concerned to hit a brick wall in carrying out their investigations. 

This has been amply demonstrated in data leaks analysed by international consortiums of journalists: white-collar criminals, tax fraudsters, the mafia or those who want to get round sanctions regularly call on the valuable skills of lawyers to conceal the source of their assets, hide their transactions or mask the ultimate beneficial owner of a company or transaction.

The Panama Papers, or the importance of Swiss gatekeepers

Switzerland has always occupied a special place in this vast market of non-financial services. In 2016, the Panama Papers (an investigation by the International Consortium of Investigative Journalists (ICIJ)) proved it. Data from a hacking into the server of the firm Mossack Fonseca (one of the most famous Panamanian providers of financial services) revealed that 1,339 lawyers, financial advisers and other Swiss intermediaries had set up more than 37,000 offshore companies – over a sixth of all the organisations identified by the ICIJ – during the last 40 years, providing services to tax evaders, powerful elites, politically exposed persons (known as PEPs) and even criminals. As a result, Switzerland ranked second in the list of countries providing such services, behind Hong Kong and ahead of the United Kingdom.

The dubious practices of several stars of the Swiss bar then rose to the surface. They included those of the legendary Marc Bonnant, a passionate defender of the French language and a director of at least 136 companies, most of which existed solely to hold bank accounts, masking the identity of their beneficial owners, according to the ICIJ. 

In the 2010s, the Geneva-based lawyer – whose clients included, among others, billionaires and powerful kleptocrats – was the sole director of two entities registered in the British Virgin Islands (and held by a fund in the Cayman Islands). Despite having no experience in the oil industry, these companies had obtained exploration rights close to Lake Albert, in the Democratic Republic of the Congo (DRC). Hiding behind this set-up was a South African businessman, Khulubuse Clive Zuma, alias KCZ, a fan of luxury cars and nephew of the country’s president, Jacob Zuma, who allegedly helped him to build up his fortune, as revealed by an investigation by Swiss newspaper Tribune de Genève. 

Back in the 1990s, Maître Bonnant had also been tasked by Beny Steinmetz, the French-Israeli mining magnate, to register and manage a foundation in Liechtenstein that owned all the companies in his Beny Steinmetz Group Resources (BSGR) empire. And he was one of the billionaire's lawyers when the latter was prosecuted and convicted in Geneva in September 2022, for bribery of foreign public officials in connection with his activities in Guinea. 

See our press release at the time. 

The Zurich-based law firm Dietrich, Baumgartner & Partner was also caught by the Panama Papers. In email exchanges with his employees, one of the firm’s founders, Andres Baumgartner, boasted of “having a relationship with people in the KGB, up to Vladimir Putin”, as revealed by The Guardian. In 2014, the firm helped cellist Sergey Roldugin – a close friend of the Russian president and godfather to his older daughter – to open an account at Gazprombank (Zurich), without it being made aware of his status as a PEP. The firm was instructed directly by Bank Rossiya – the Russian bank controlled by people close to President Putin, which had been sanctioned by Europe and the United States because of Russia’s annexation of Crimea – to transfer millions of dollars to this account and then redistribute the money to offshore companies. The transactions were carried out by Mossack Fonseca.

“Sit down and take a breath”

Initially, the Swiss Federal Council refused to act in response to the scandal, as it had done in 2013, after the publication of the Offshore Leaks, the ICIJ’s first revelations about tax havens. At the time, the government had batted away a motion filed by Carlo Sommaruga, then a member of the National Council (the lower chamber of the Swiss parliament), who was already asking for the scope of the AMLA to be extended to lawyers who set up companies, trusts or foundations on behalf of their clients. 

Faced with what he called the “media hype” around the Panama Papers, Federal Councillor Ueli Maurer, the finance minister, told the newspaper Blick that people should first “sit down and take a breath”. Asked about the possibility of extending the AMLA to lawyers in their capacity as advisers, he replied that it was “impossible to have the state control every activity”, since “those with criminal intentions will always find a loophole”. Maurer believed that “[very wealthy individuals: ed.] should have the possibility to invest in offshore activities”. 

Several lawyers joined the fray, explaining that these activities belonged in the past and/or were not illegal, and that the colleagues mentioned were risking “absolutely nothing”. And they were right, since no-one was prosecuted. At the same time, François Canonica, a former president of the Geneva Bar Association, denounced the journalists who had “received” stolen information and were, in his view, “pariahs”. Another lawyer, Christian Lüscher, at the time a member of the National Council, viewed the leaks as the work of the United States, inviting “the world’s policeman” to “clean up its own act”. 

It has taken several years for Berne to finally agree to accept the FATF’s requests. An initial draft, aimed at extending the scope of anti-money laundering legislation to financial advisers was produced as part of a wider review of the AMLA in 2019. But in autumn 2021, after two years of intense lobbying from part of the profession, and several months of stormy debate, the section on due diligence for advisers was nipped in the bud and the Swiss Parliament refused to countenance it. 

At the time, Ueli Maurer said that the reform was not “the most important issue for the financial marketplace” but promised that it would be put to Parliament again.

The remake: a new minimal law

Berne returned to the issue a few months after the full-scale Russian invasion of Ukraine, when closing the loopholes in the anti-money laundering system became a matter of urgency in reputational terms. Switzerland followed the European Union in imposing sanctions on Russia, casting it at the time in a somewhat unfavourable light as a country that had welcomed doubtful funds from Russian oligarchs close to the Kremlin for decades, helped by a number of Swiss lawyers, among other things. 

A draft was put out for consultation in the summer of 2023, combined with a new federal law on the transparency of legal entities, which provides, among other things, for the creation of a federal register of companies’ beneficial owners, another essential tool in combating economic crime.

The Federal Council published its dispatch to parliament on 22 May. The latest version of the text provides for a looser mechanism than the one rejected by the Swiss Parliament in 2021. At the time, Berne wanted to introduce due-diligence obligations for all advisory activities, without distinction. Opponents at the time raised the threat of creating a “bureaucratic monster” with a “completely absurd situation, where a lawyer who has met a client for an hour would spend five hours on administrative formalities,” explained the lawyer and member of the National Council, Vincent Maître. 

The criticisms were taken seriously. The plan now is to extend the scope of the AMLA to lawyers acting as “advisers”, but only if they are providing services that carry a risk of money laundering and the financing of terrorism, such as buying and selling property; creating, managing and dealing with administrative issues for companies, foundations and trusts; capitalising, selling or buying a company; providing addresses and premises for entities of this kind; or acting as a nominee shareholder on behalf of someone else.

Limited reporting of suspicious activities and the primacy of the attorney-client privilege

If the law is adopted, lawyers will have to carry out a series of checks to identify the beneficial owner of the entities they register and administer. They will also need to clarify the economic background and goal of the services requested, and retain the documentation. And if the answers are non-existent or unclear, lawyers must refuse to provide the services concerned; otherwise, they will run the risk of criminal proceedings for having potentially supported illegal activities.

If they have well-founded suspicions, they must report them to the Money Laundering Reporting Office Switzerland (MROS), the country’s financial intelligence unit. But in reality, what may look like a stringent measure is very limited in scope, since only lawyers who are carrying out a financial transaction in the name or on behalf of their clients (and who are not classed as financial intermediaries because their activity does not meet the legal criteria) will be required to report them. “It should be a rare occurrence in practice,” the Federal Council has already warned.

Another limitation is that no suspicious information obtained in relation to the lawyer’s “typical” activities (representing clients in court and offering legal advice), which are therefore covered by the attorney-client privilege, can be disclosed to the MROS. A guarantee that was hard-fought by Swiss lawyers and goes beyond the practices in force in the EU.

According to estimates by the Federal Council, the new regulation could affect between 1,500 and 2,500 lawyers (out of the 12,000 members of the Swiss Bar Association), most of whom are concentrated “in the country’s large firms”, explains Berne. In 2022, those who were classed as financial intermediaries and are already subject to the AMLA numbered around 720. The debate in the Swiss Parliament will begin in autumn 2024.

I’m not a police officer!

In the meantime, the profession is in uproar. The prospect of being obliged to carry out checks concerns or even disgusts those who believe the relationship of trust with their clients will be disrupted. 

“So, you spot that one of your clients has done something stupid and you report them? But I’m not a police officer!” says Daniel Richard, frustrated by the fact that “by wanting to control everything through legislation, you risk removing everyone’s sense of responsibility”. He tells how experience has taught him to spot suspicious requests. 

As was the case in 2021, and despite the assurances given by the Federal Council, some believe that there is a fresh new threat hovering over the sacrosanct attorney-client privilege, which could, in practice, “be weakened or frankly destroyed”. 

Prosecutors are not convinced by this argument. Interviewed by Public Eye in 2021, the attorney general of Geneva, Yves Bertossa, believed that introducing due-diligence obligations would not endanger the attorney-client privilege, which 

“was not created to protect the secrecy of offshore companies used to pay bribes”. 

His former colleague,  former prosecutor Jean Bernard Schmid, now a lawyer with the firm CMS von Erlach Partners SA, shares his view. He also comments, however, that “some lawyers often provide a typical service, which is covered by the attorney-client privilege, and a non-typical or commercial service, which is not covered, to the same client,” and that drawing a distinction between the two can be particularly tricky. 

The Swiss Bar Association warns against getting into an inextricable situation, in which “the lawyer is at permanent risk of breaching either the obligation to report or professional secrecy, and facing the corresponding sanctions”.

Raphaël Mahaim, a lawyer and member of the National Council (who defends Public Eye’s interests in certain cases) supports the reform that could end “decades of irresponsible practices” and compares the arguments put forward by some of his parliamentary colleagues to those of bankers on the demise of banking secrecy in 2009. He fears that the Swiss Parliament will again reject the reform, or weaken it significantly. “The Federal Council has already opted for a highly restricted obligation to report and the primacy of professional secrecy over the AMLA,” he comments. 

Lawyers in Europe have long been used to reacting without undue qualms to questionable situations. One recounts how a Scandinavian colleague who, learning that her client had gone bankrupt under troubling circumstances, reported him to her country’s anti-money laundering authority, fearing that the fees she had been paid were of unlawful origin.

A carpenter is not a young oligarch

On his firm’s website, Lorenzo Croce, a specialist in the law of trusts and foundations, questions how it is “reasonably” possible “to determine in advance whether the structure set up will ultimately serve to launder money or finance terrorism,” commenting ironically on “the killer argument uttered by a prosecutor who will say to the lawyer 10 years later, ‘you should have known that your client had dishonourable intentions for their new company’.” 

The Federal Council has sought to calm the situation, explaining in its explanatory report to the reform that due diligence obligations will vary depending on whether the lawyer is helping “the sole beneficial owner of a local carpentry company, which has been in business for years to create a subsidiary” or if they are advising “a young and allegedly prosperous businessman from a highly industrialised country, who has contacts with a politically exposed person, seeking to create a complex trust structure involving several offshore jurisdictions, in which he wants to invest USD 100 million from his alleged family fortune”. The latter case would clearly be a red flag.

Nonetheless, uncertainties remain for many. A lawyer from French-speaking Switzerland, who has never acted as a financial intermediary, admits that until now, she has never had to “take particular precautions” to know where her clients’ wealth has come from. “It’s not impossible that someone who has made their fortune through criminal activities takes advantage of an actual or fictitious divorce to launder money,” she explains, concerned about the risks run by lawyers, for example in the case of legal advice given before a procedure to unwind a matrimonial property agreement. 

“If the AMLA is extended to include lawyers, they will simply tell their clients what they need to do to purchase an offshore company elsewhere. It’s as simple as that!” predicts a partner in a firm in Geneva. A specialist in the art market, he rejects “the stereotypical view of the work of a commercial lawyer who sets up schemes to conceal money laundering, when most of the time, these companies are formed for perfectly legitimate reasons”. He cites the example of a wealthy collector who wants to move his masterpiece to lend it to an exhibition, and asks to register a company in Panama to hold the valuable asset. “It’s a common legal practice! It means the name of the owner can be kept private, so that they are protected from any potential claims from creditors,” he explains. 

He forgets to mention, however, that it also allows the owners of works of art of doubtful origin to remain hidden. A Panama Papers investigation showed that a painting by Modigliani, stolen by the Nazis during the Second World War, was hidden from prosecutors for years. It was held in secret by a Panamanian company, behind which hid a leading art dealer.

The well-worn mantra of Article 305bis

For several years now, opponents of the reform have never missed an opportunity to recall that Article 305bis of the Swiss Criminal Code already allows the prosecution for money-laundering of “any person (including a lawyer: ed.) who carries out an act that is aimed at frustrating the identification of the origin, the tracing or the forfeiture of assets which he knows or must assume originate from a felony or aggravated tax misdemeanour”. 

This proves, according to a recent explanation by the Swiss Bar Association, that the anti-money laundering framework is already sufficiently robust, since “any lawyer can be punished if they take part in transactions that run the risk of being used for money laundering or aggravated tax misdemeanours”. 

Busy defending the flourishing Swiss financial advisory industry, Berne has long repeated the same kind of argument, but it now believes that “the application of the ordinary criminal law (particularly Article 305bis) is not sufficient” to “oblige a notary or lawyer to ask their client certain essential questions”, adding that it “is often difficult, if not impossible, for the criminal justice authorities to identify non-financial intermediaries who were aware of the criminal origin of the funds or legal structures they created or on which they offered advice”. 

Currently, there are no statistics available on the number of lawyers prosecuted under Article 305bis of the Swiss Criminal Code and proceedings, which are probably exceedingly rare, are almost never made public. 

In 2017, Gotham City, a Swiss news outlet focusing on white-collar crime, revealed the exemplary case of an employee at the Geneva-based law firm Meyer Avocats (which specialises in the management of yachts and private planes) who was charged on the basis of Article 305bis. She had managed two offshore companies that owned two yachts belonging to Teodorin Obiang, son of the president of Equatorial Guinea, who was prosecuted in Geneva for money laundering and criminal mismanagement. The public prosecutor’s office in Geneva accused the lawyer of having “decisively intervened in what appeared to be a set-up designed to conceal the result of offences committed in Equatorial Guinea”. Claiming professional confidentiality, she had fought unsuccessfully to have prosecutor Claudio Mascotto, who was in charge of the investigation, removed from the case, as described in the judgment of the Federal Criminal Court. In the end, it was all a storm in a teacup: the case was dismissed by the court in Geneva on the basis of Article 53 of the Swiss Criminal Code (when the offender has made reparation for the loss, damage or injury) and the proceedings abandoned.

Underwear for oligarchs and dictators

Other revelations and data leaks have highlighted the urgent need for legislation since the Panama Papers were published. In October 2021, six months after the Swiss Parliament refused to make advisers subject to the AMLA, the Pandora Papers hammered another nail into the coffin. This time round, 90 Swiss law firms, fiduciaries and notaries were identified by the ICIJ as working hand-in-hand with 14 firms providing services to current and former top managers, politicians and senior officials, as well as a handful of crooks and assassins.

The former Russian Finance Minister, Vladimir Chernukhin, dismissed by Putin in 2004, had concealed his fortune through a complex set of 28 offshore organisations managed and administered by lawyers in Zurich and Geneva. As revealed in the Swiss Tamedia newspapers, the Geneva-based lawyers Dominique and Michel Amaudruz – parents of Céline Amaudruz, vice-president of the Swiss People’s Party and a member of the National Council – had been part of an offshore structure for the purpose of purchasing a 25,000 m² villa in Cap d’Antibes, on the Côte d’Azur, for the former official. During a legal dispute in London against one of his rivals, Chernukhin commented that the structuress concealing his wealth were “like underwear”. 

“It’s nice and clean but I wouldn’t want to show it to everyone,” 

he explained.

In several investigations, Public Eye has revealed the role played by Swiss lawyers in helping rich and powerful people from countries where corruption is endemic. Kazakhstan is one of these authoritarian states that is overflowing with natural resources and where a few families have helped themselves to much of the country’s wealth, to the detriment of the population. This elite group has long fixed its choice on Switzerland and its banks, delighted by the discreet advice offered by Swiss lawyers.

In the 2010s, minister and diplomat Kassym-Jomart Tokayev – who was elected president of Kazakhstan in 2019 – managed his underground business from Geneva via his son and nephew. The family had turned to a trusted lawyer who wore several hats, Thierry Ulmann, whom they consulted for questions of day-to-day administration, registering companies in Switzerland and overseeing property purchases. He also drafted the Articles of Association of the Tokayev family foundation, described as a “Foundation for innovative Diplomacy”. It is now in the course of liquidation. We contacted Thierry Ulmann but he had nothing to say on the matter. He did, however, explain that he personally was already subject to the AMLA as a financial intermediary. In a lengthy response, he stated that “extending the scope of the Act would create more bureaucratic waste and inefficiency in the courts” (…) “as if you’re told to take a veterinary examination every time you write something about the life of cats and dogs”.

Maître Jean-Christophe Hocke – a partner in the leading firm Python and later Kellerhals Carrard in Geneva – has been advising the ultra-rich family of Nursultan Nazarbayev, president and uncontested master of Kazakhstan from 1991 to 2019, for decades. One of his tasks was to help the youngest daughter, Dinara Kulibayeva, who holds a residence permit in Switzerland, to settle in Geneva. She is married to Timur Kulibayev, a billionaire who made his fortune in oil and who, for a time, was under investigation in a money-laundering case, which was ultimately dismissed in late 2013. In 2009, Dinara purchased a property near Geneva, for the astronomical sum of 74.7 million Swiss francs. Ten years later, she bought a castle in the region (106 million francs), having “fallen in love with it”, as Maître Hocke explained to the media at the time. Documents in our possession showed that the lawyer also helped two Kazakh citizens close to the Kulibayevs who wanted to purchase properties near Geneva. The pair were in business with the trading giant Vitol, as our investigation revealed.

Russophile lawyers in the spotlight

Russia’s act of aggression against Ukraine has put some of the “non-typical” activities of certain lawyers working for Russian oligarchs back in the spotlight. One of those in our gallery of oligarchs was multi-billionaire Vladimir Lisin, a steel baron who has so far escaped sanctions, despite his proximity to Putin. This patron of industry had a trusted partner in Geneva, where his son studied: Alain Bionda, a Russophile lawyer who managed part of Lisin’s vast fortune in Switzerland and, until today, cannot praise his client highly enough. 

Sanctioned by the United States, the European Union and Switzerland, Suleyman Kerimov, the senator from Dagestan who made his fortune in fertilizers and the gold-mining sector, had long entrusted his affairs to a fiduciary agent in Lucerne, Alexander Studhalter. Later, when the latter was taken in for questioning in France, suspected of having acted as a screen for the purchase of a luxury property in Cap d’Antibes via a Swiss company, a lawyer from Zug emerged on the scene. As revealed by several media outlets, this lawyer acted for the oligarch’s daughter, Gulnara Kerimova, who bought the villa in question in 2021, along with three other French properties presumed to belong to her father. 

In November 2022, the US Treasury placed the Zug-based lawyer on its list of sanctions “for having acted or purported to act for or on behalf of, directly or indirectly, Gulnara Kerimova”, with the whole of the oligarch’s network and family targeted. The lawyer took legal action against several journalists to have his name removed from their articles.

Refugees in Dubai

A Swiss lawyer who advises numerous clients from the former USSR tries to be as discreet as possible. He is confident that he has always taken the necessary precautions. “I’ve known the families I manage for 15 years and I know what they do.” “A few years ago, a Ukrainian man came to me and asked me if he could buy a house with 5 million in cash... Those are the kinds of people I don’t advise. The same goes for oligarchs: it’s too risky,” he says. 

Nonetheless, he is highly mistrustful of the Federal Council’s bill. “Before we offer even general advice, we will be forced to ask our clients where their money comes from. It’s a lot of work and new obligations and on top of that, we would need to monitor financial transactions, which is almost impossible,” he acknowledges.

Most of his Russian clients have moved to Dubai, the city-state in the United Arab Emirates, which he now visits regularly. He comments that several of his Swiss colleagues have moved to this little tax haven, which has not imposed sanctions on Moscow, and where business can be transacted calmly and quietly.

A lawyer and member of parliament seeks to re-establish the rule of law

The room for manoeuvre in Switzerland is shrinking. As well as the forthcoming reform, a wind of revolt is blowing over the hot topic of sanctions against Russia. In autumn 2022, Berne banned lawyers from providing legal advice services – except in legal proceedings – either directly or indirectly to the Russian government, as well as to any legal entities or organisations based in the country, replicating the 8^th package of sanctions adopted by the European Union.

This reaction to Russia’s flagrant breaches of international law caused an uproar. Sandrine Giroud, a lawyer with the leading firm LALIVE and vice-president of the Geneva Bar Association, believes that “the ban goes too far and breaches the UN’s basic principles on the role of lawyers”. The Geneva Bar Association has already sent two letters to Federal Councillor Guy Parmelin, the economy minister in charge of sanctions, to ask him to remove this measure. In the meantime, the Geneva, Brussels and Paris bars have submitted a joint application for annulment to the General Court.

In late 2023, Beat Rieder, a lawyer and member of the Council of States from the canton of Valais,  took up the case, submitting a motion soberly entitled “Re-establishing the Rule of Law”, in which he stated that “banning (…) the provision of legal services is effectively removing a constitutional right”. Also an opponent of the bill on lawyers acting as financial advisers, Mr. Rieder stresses the “lack of a clear distinction between legal advice and legal representation”. 

In February, the Federal Council asked to reject the motion, believing that the scope of the ban was sufficiently limited, and declaring itself open to further clarifying the situation with the sector. 

Whether opposing this particular ban or defending the business model of providing advisory services in a comfortable and confidential setting, without asking indiscreet questions of its wealthy clientele, an entire section of the profession promises an intense lobbying behind the scenes in the coming months.