People - 10.04.2017 - 00:00 

Combating money laundering in investment companies

How can investment companies implement their duties of care when it comes to fighting money laundering? And are the existing instruments sufficient for enforcing them? Reto Luthiger looked into these questions in his doctoral thesis.
Source: HSG Newsroom

11 April 2017. As a lawyer, Reto Luthiger was responsible for a larger mandate, when he was confronted with the question of money laundering at the interface between company and collective investment scheme law. This was the starting point for a more in-depth look into this subject, and his subsequent doctoral thesis. In his thesis, he examined "Combating money laundering in Investment Companies – Shareholdee Relationships in Anti-Money-Laundering Law (GwG)".

Duties of Care when Combating Money Laundering

The focal point of Reto Luthiger’s doctoral thesis is the question of how investment companies can implement their duties of care according to anti-money-laundering law. The anti-money-laundering law is geared towards business relationships. But in contrast to asset managers, forex dealers, banks, stockbrokers and other financial intermediaries, investment companies must apply their duties of care to shareholder relationships. "Whereas business relationships are based on contractual agreements under the law of obligations, and thus on freedom of contract, shareholder relationships usually arise as a result of law, and are based to a significant extent on compulsory provisions in company law," says Reto Luthiger. This means that investment companies often have no idea there are new shareholders, and what’s more, membership cannot generally be revoked for an existing shareholder. Nevertheless, investment companies must still fulfil their duties of care. For this reason, Luthiger reviewed possible civil and public law instruments, such as company law notification requirements, restricted transferability regulations or stock market disclosure requirements in his doctoral thesis, which could be used for this purpose by investment companies.

Anti-Money-Laundering Law – A Niche Subject

Reto Luthiger knows that he researched a niche subject. "Nevertheless, I hope this treatment and comparison of certain fundamental topics from company law, the regulation of collective investment schemes and anti-money laundering will provide a valuable contribution within this legal area," he said. "And even if my doctoral thesis does not achieve the desired publicity and perception, it still helped my personal development significantly from both a technical and methodical perspective." He is open to possible activities in the scientific area, but is still currently working as a lawyer in the field of financial markets.