The Swiss Federal Banking Commission said on Tuesday that a draft laws would place new obligations on banks and securities dealers to monitor and investigate their clients.

Greater attention would also be paid to clients involved in high-risk business relationships.

The commission said the proposed regulations, which are intended to come into effect by mid-2003, are aimed at strengthening the "war on money laundering and terrorism."

The supervisory body added that the decision to make banks moreresponsible for identifying the owners of accounts had been motivated by money laundering cases involving the late Nigerian leader Sani Abacha and Peru's former intelligence chief Vladimiro Montesinos.

Both corruption scandals saw Swiss banks "named and shamed" foragreeing to handle hundreds of millions of dollars secreted away by the two men.

Under the initiative, banks would be required to develop guidelines to identify so-called higher-risk business relationships. These would include knowing where the client lives,their business activities, the size and frequency of transactions,as well as the destinations or origins of regular payments.

"Any bank or securities dealer investigating an unusual transaction that discovers a link to a terrorist organization, to terrorism or to the financing of terrorism, must report their suspicions immediately," said the commission in a statement.

For the first time, Swiss banks would also need to attach special emphasis to monitoring so-called "politically exposed persons" such as high-powered politicians who may be in a positionto seek bribes or have access to government funds.

The proposed regulations will now undergo a three-month consultation period. Once introduced, they would tighten Swiss banking rules introduced in 1998.