Swiss private bankers have criticised the new European rules to create a single financial market and called on the Swiss government for more...

Swiss private bankers have criticised the new European rules to create a single financial market and called on the Swiss government for more time to consider new measures to combat money laundering.

Speaking to the press in Geneva yesterday, Konrad Hummler, vice-president of the Swiss Private Bankers Association, said the regulations for the EU's Markets in Financial Instruments Directive would increase costs for investors and make life harder for smaller banks.

From November 2007, MiFID will require banks to assess the suitability of their clients to bear the risks in financial instruments. Mr Hummler, a partner at Bank Wegelin, believes that these rules might breach privacy laws because it would mean asking customers about their money in other banks.

Although at present there are no plans for Switzerland to adapt its laws to comply with MiFID, Swiss banks will be obliged to comply with the new framework in their foreign operations.

As Switzerland has introduced comprehensive measures to prevent money laundering and terror financing, the bankers believe the plans to incorporate the proposals by the Financial Action Task Force uneconomical and inappropriate.

FATF is an inter-governmental organisation created in 1989 by the Group of Seven richest nations with the mandate to develop and promote national and international policies to combat money laundering and terrorist financing.

Pierre Darier, president of the Swiss Private Bankers Association, criticised a plan to make any market abuse such as insider dealing or price manipulation a crime rather than just an offence, saying not everything that went wrong in markets could be attributed to criminal intent.

"I think we all see that some forms of misbehaviour in financial markets are criminal. But some others are not ... and if you treat everything the same as major crimes ... you don't know how to differentiate," he said.

He proposed that before changing Swiss law to conform to these new international minimum standards, Switzerland should at the very least discriminate between serious market abuse and less grave matters "think, then grovel," said Mr Darier, a partner at Lombard Odier Darier Hentsch.

Nevertheless, the Swiss private bankers reconfirmed support for their government’s action in the tightening of the penal standards for insider trading, as agreed at the end of 2006.