Customer Due Diligence (CDD) Requirements for Politically Exposed Persons (PEPs)
Enhanced CDD Measures for PEPs
Pursuant to Art. 10 of the Swiss Anti-Money Laundering Ordinance (SPG), financial institutions are required to conduct enhanced due diligence on politically exposed persons, which includes:
- Verifying identity and beneficial ownership: Financial institutions must verify the identity of PEPs and determine their beneficial ownership.
- Regular reviews of business relationships: Institutions must regularly review business relationships with PEPs to ensure they remain compliant with CDD requirements.
- Risk-based policies and procedures: Financial institutions are required to have risk-based policies and procedures in place for managing the risks associated with business relationships involving PEPs.
Reporting Business Relationships or Transactions Involving PEPs
Financial institutions must report any business relationship or transaction involving a PEP to the Swiss Money Laundering Reporting Office (MROS).
Who are Considered Politically Exposed Persons?
PEPs include:
- Heads of state, members of government, and parliament: Current and former officials holding these positions.
- Members of supervisory boards and executive bodies: Members of banks, securities firms, insurance companies, and other important economic institutions.
- Family members or close associates: Relatives and associates of PEPs.
Customer Due Diligence (CDD) Requirements for Beneficial Owners
Financial institutions must conduct CDD measures on beneficial owners of customers in accordance with Art. 8 SPG. These measures include:
- Verifying the identity of the beneficial owner
- Understanding the ownership structure: Identifying the person who ultimately owns or controls the customer.
- Determining whether the beneficial owner is a PEP: Triggers enhanced due diligence measures.
- Maintaining accurate and up-to-date information: On the beneficial owner.
Ongoing Monitoring of Customer Relationships
Financial institutions must conduct timely risk-adequate monitoring of their business relationships to ensure that the business relationship history and transactions are consistent with their knowledge of the customer and the customer’s business relationship.
- Active inquiry into changes: Institutions must be alert to changes in the customer’s behavior or deviations from typical behavioral patterns.
- Simple investigations: Carried out when circumstances arise or transactions take place that deviate from the business profile.
- Special investigations: Conducted when circumstances arise or transactions take place that give rise to suspicion of money laundering, predicate offenses, organized crime, or terror activities.
Reporting Suspicious Transactions
Financial institutions must report to the MROS all suspicious transactions immediately upon discovery, and not later than 5 working days after such transactions have been carried out.