Banking Sector Embraces New Regulations on Identifying Beneficial Owners
In an effort to enhance transparency and combat financial crimes, the Swiss Banking Association (SBA) has introduced new guidelines requiring banks to document the identity of beneficial owners.
Documentation Requirements
According to Article 28 of the SBA’s code of conduct, contracting partners must provide information about their beneficial owners, including:
- Name
- Date of birth
- Nationality
- Domicile address
If a contracting partner declares that the beneficial owner is a third party, they must provide Form A, which includes the required information. However, if the beneficial owner hails from a country where date of birth or domicile address are not used, this information is not necessary.
In exceptional cases, banks may accept simple copies of identification documents or other official documents as proof of beneficial ownership. The minimum requirement is to document the last name and first name or company name on Form A.
Exceptions
Certain entities are exempt from providing a declaration about their beneficial owners, including:
- Natural persons where the bank has no doubts that they are identical to the beneficial owner
- Operating legal entities and partnerships not quoted on the stock exchange
- Public authorities
- Banks and other financial intermediaries with registered offices in Switzerland
However, banks and securities dealers with registered offices or domicile in foreign countries must provide a declaration about their beneficial owners if they manage secondary accounts for unnamed clients and are not subject to appropriate supervision and regulation with respect to combating money laundering and terrorist financing. Similarly, further financial intermediaries with registered offices or domicile in foreign countries must provide such information if they are not subject to any appropriate prudential supervision and regulation.
Implementation
Banks are free to use their own forms as long as the content is equivalent to that of the model form provided by the SBA. The declaration from the contracting partner regarding the beneficial owner can also be provided through a video or online identification procedure defined in FINMA provisions.
The SBA has emphasized the importance of complying with these new regulations, which are aimed at enhancing transparency and preventing financial crimes. Failure to comply may result in sanctions and reputational damage.
Conclusion
The introduction of these new guidelines is a significant step towards promoting transparency and combating financial crimes in the Swiss banking sector. By requiring banks to document the identity of beneficial owners, the SBA aims to prevent money laundering and terrorist financing, and ensure that Switzerland’s banking system remains a safe and secure environment for both clients and investors.