BERNE (Reuters) - Switzerland is not doing enough to rid itself of ill-gotten funds, despite loosening its banking secrecy, and should now beef up its law against money laundering, an global corruption watchdog said on Tuesday.

Cobus de Swardt, head of the Berlin-based group Transparency International, said Berne needed to prevent ill-gotten funds from being hidden or laundered, for example through cash purchases of luxury goods or property.

In May, Switzerland said it would do away with banking secrecy by joining the growing ranks of countries agreeing to share tax information. But it has been less aggressive about criminally gained funds.

While it has a law against money laundering, no substantial checks are required on cash purchases at the many luxury shops, art dealers and jewelers that dot the high streets of cities such as Geneva and Zurich.

"I think the world's perception on issues of fighting corruption is one where your efforts in last years in dealing with issues like banking secrecy have not found the resonance which probably you would have hoped they would find," de Swardt told journalists in the Swiss capital.

De Swardt was speaking at a news conference to launch a Transparency International campaign to persuade governments to halt the flow of illicit money gained through abuse of power, bribery and secret deals.

Switzerland is the world's largest offshore cash center with roughly 2 trillion Swiss francs ($2.17 trillion) in assets. It was forced to make concessions on secrecy laws due to a global tax crackdown.

The government has submitted a bill in parliament to adopt the guidelines of the intergovernmental Financial Action Task Force to fight money laundering, but it faced stiff opposition in the lower house. The upper house backed it on first reading and will hold a second debate on it next week.

In addition to tighter money laundering laws, de Swardt said Switzerland should also require that the names of shares owners are public. These "beneficial owners" can now hide behind legal entitles when listed on shares registers.

He urged Switzerland to tackle these issues now and not wait until international pressure builds up, as the country did on sharing tax data.

"If you move on banking secrecy and move on beneficial owners, it will become for a short-term period a potential competitive advantage," de Swardt said.

"If I'm a Swiss business person I would say, bring it on."

(Reporting By Katharina Bart; Editing by Tom Heneghan)