Financial Action Task Force, an inter-governmental body set up to check money laundering, terrorist financing and financing of proliferation of weapons of mass destruction, also said the assistance provided by Switzerland is "generally satisfactory and has involved the freezing and restitution of large sums linked with international corruption".
At the same time, FATF report flagged "shortcomings associated with maintaining the confidentiality of requests" for information and assistance concerning suspected cases of money laundering.
The two countries have also signed a pact for automatic exchange of information on tax matters, which will come into force in 2018 and facilitate auto-sharing of details about people with suspected black money in Swiss banks 2019 onwards.
Switzerland is a major international financial centre. In 2014, total assets managed by Swiss banks stood at USD 6.74 trillion, half of which belonged to foreign customers, and is about 4.1 per cent of global assets under management.
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Commenting on the Anti-Money Laundering and Counter- Terrorist Financing Measures Taken By Switzerland report, the Swiss government said it has received "good marks" overall and has achieved "an above-average result compared to those countries already reviewed".
It added: "The FATF acknowledges the quality of the Swiss system for combating money laundering and terrorist financing. In its report, it made a series of recommendations to improve Swiss legislation and its implementation."
The new report reflects the progress that Switzerland has made since the last complete mutual evaluation report published in 2005.
as compliant or largely compliant in 31 of the 40 recommendations. In assessing effectiveness as a key element of the FATF's evaluation of Switzerland, it fared well in seven of the eleven topic areas examined. In addition, the FATF found no significant gaps in the system.
"Overall Switzerland's results can be considered to be good even in comparison to the other countries which have already been reviewed. Switzerland must, however, pursue its efforts in combating money laundering and terrorist financing which is why the report contains a series of recommendations to improve Swiss legislation and its implementation," the government said.
FATF did, however, find some vulnerabilities in the system, in particular in the preventive measures and the subordination to the Money Laundering Act of lawyers, notaries and fiduciaries relating to some non-financial activities such as the establishment of companies and trusts.
With regard to the effectiveness of the system, the FATF underscored the good understanding of money laundering and terrorist financing risks in Switzerland, the quality of the analysis of financial information by the MROS and its appropriate use in criminal investigations.
At the same time, the FATF has voiced criticism of certain aspects of financial intermediary supervision and the international cooperation of the MROS.
"There is also room for improvement in the implementation of preventive measures on the part of the financial intermediaries. On this point, the number of suspicious activity reports is considered to be too low in relation to the significance of the Swiss financial centre. The coexistence of the obligation to notify and the right to report in practice leads to confusion," it added.
The Federal Department of Finance (FDF) will analyse the recommendations of the report in the context of the inter-departmental coordinating group on combating money laundering and the financing of terrorism (CGMF) and will submit a corresponding proposal in 2017 to the Federal Council.