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Survivors’ Provision: Repealed Laws and Due Diligence Requirements

In a significant move, the government has repealed two laws related to financial transactions and introduced new requirements for due diligence in financial dealings.

Repealed Laws

The repealed laws, Art. 4 b) and c), were enacted to prevent money laundering and terrorist financing. The government has now decided to repeal these laws and replace them with new provisions that are more effective in preventing these illegal activities.

New Requirements for Due Diligence

Under the new regulations, persons subject to due diligence must perform specific duties when establishing a business relationship or carrying out occasional transactions. These duties include:

• Identification and verification of the identity of the contracting party
• Identification and verification of the beneficial owner
• Establishment of a business profile
• Supervision of business relationships at a level commensurate with the risk involved

Identification and Verification of Beneficial Owners

The new regulations require persons subject to due diligence to identify and verify the beneficial owners of legal entities. This includes obtaining information about the ownership and control structure of the entity.

Legal Entities Organised on a Discretionary Basis

When dealing with legal entities organised on a discretionary basis, persons subject to due diligence must obtain sufficient information about the persons in whose interest the entity has been established or is operated. They must also establish the identity of the recipient of the distribution and verify that identity at the time of paying out.

Government Oversight

The government will provide further details on the procedure for identifying and verifying the identity of contracting parties and beneficial owners through ordinances.

Impact on Financial Institutions

The new regulations are expected to have a significant impact on financial institutions, which must now implement stricter due diligence measures to prevent money laundering and terrorist financing. The regulations also require financial institutions to maintain proper records of outward movements of assets.

Overall, the repeal of the old laws and introduction of new due diligence requirements aim to strengthen Switzerland’s anti-money laundering and counter-terrorist financing regime, ensuring that the country remains a secure and reliable hub for international financial transactions.