Financial Crime World

Know Your Customer: A Step-by-Step Guide to Compliance in Switzerland

In today’s financial landscape, knowing your customer has become a vital aspect of doing business in Switzerland. The Swiss Financial Market Supervisory Authority (FINMA) requires banks, trustees, and other financial institutions to implement Anti-Money Laundering (AML) and Know Your Customer (KYC) procedures to prevent money laundering and terrorist financing.

This guide will walk you through the six essential steps of AML-KYC compliance in Switzerland:

Step 1: Customer Identification

Verify the identity of your customers using reliable and independent sources. This includes verifying their name, address, date of birth, and other relevant information.

  • Acceptable forms of proof of address in Switzerland include:
    • Utility bills
    • Bank statements
    • Government-issued ID
    • Tax bills
    • Official correspondence
    • Rent or lease agreements
  • Electronic verification methods can also be used to quickly and accurately verify the customer’s address.

Step 2: Risk Assessment

Assess the risk associated with a customer or transaction to determine if there is a higher risk of money laundering or terrorist financing. This includes evaluating their profile, business activities, and source of funds.

Step 3: Customer Due Diligence

Gather additional information about your customers, including their business activities, source of wealth, and other relevant information. This helps to better understand their financial profile and identify any potential risks.

Step 4: Monitoring Transactions

Monitor your customers’ transactions to ensure they are consistent with their profile and identify any suspicious activities.

Step 5: Record-Keeping

Maintain accurate and up-to-date records of all customer information, including the results of the customer identification and risk assessment processes.

Step 6: Reporting Suspicious Activities

Report any suspicious activities to the relevant authorities to prevent money laundering and terrorist financing.

Compliance with AML-KYC regulations is crucial for financial institutions in Switzerland. Banks, trustees, and other financial institutions must ensure that they have adequate systems and processes in place to prevent money laundering and know their customers.

By following these six steps, you can maintain the integrity of the financial system, prevent criminal activities, and protect your institution and its customers from financial losses.