ZURICH (Reuters) - Switzerland must do more to prevent financial crime and banks in particular should step up efforts to spot and report suspected crimes, an inter-governmental Financial Action Task Force (FATF) said on Wednesday.
Banks fail to report some suspicious transactions and mostly only report these when information from external sources comes to light, a FATF report said.
"(Swiss financial watchdog) FINMA needs to increase supervision and sanctions regarding compliance with the reporting requirement," it said.
Once a haven for untaxed and illicit assets, Swiss authorities have been stung into action by a global push to combat money laundering and other financial crimes.
That has led to considerable improvement in its efforts since 2005, the global task force said.
"Switzerland demonstrates a strong commitment to mutual legal assistance," FATF said in a statement. "It should continue to pursue its efforts on all other forms of international cooperation, including on the supervision of financial groups given the key role of the Swiss financial centre."
Swiss authorities have collected financial information and seized assets for their international counterparts in a number of prominent cases, including investigations into Malaysian state fund 1MDB, global soccer body FIFA and Brazilian state-run oil company Petrobras (PETR4.SA).
The Swiss Bankers Association pushed back against FATF's methodology after the report was published: "In the view of the banks, simply increasing the number of suspicious activity reports would not necessarily result in a further rise in the effectiveness of money laundering prevention."
FINMA has called on banks to be more thorough in their checks and in October said 15 were in a "red zone" of lenders most exposed to money laundering.
The finance ministry said it would analyse the recommendations of the report and submit a corresponding proposal to the Swiss cabinet next year.
Editing by Louise Ireland