Switzerland Takes Steps to Enhance Know Your Customer Compliance Amidst Rising Anti-Money Laundering Concerns
Despite its reputation for secrecy, Switzerland is taking steps to implement anti-money laundering (AML) and counter-terrorism financing (CFT) regulations to ensure compliance with international standards. The country’s financial landscape is being revamped to prevent organized economic crime, including big-time money laundering and corruption.
FATF’s Role in Shaping AML/CFT Measures
The Financial Action Task Force (FATF), an international financial watchdog, has been instrumental in shaping Switzerland’s AML/CFT measures. Over 200 jurisdictions, including Switzerland, are complying with FATF recommendations. The organization evaluates the effectiveness of AML/CFT measures, identifies new risks, and makes recommendations based on the latest developments in the financial world.
Implementing Regulations at the Country Level
The Swiss Financial Market Supervisory Authority (FINMA) is responsible for implementing these regulations at the country level. As a private body, FINMA works closely with the government to ensure that financial protection regulations are adhered to. Switzerland’s FATF-compliant AML/CFT framework is designed to prevent illicit finance and protect the integrity of its financial system.
Standard Know Your Customer Requirements in Switzerland
In Switzerland, KYC processes have initial requirements depending on whether the customer is an individual or entity. Here are the standard requirements:
For Domestic Individuals
- Identity documents like ID or passport
- Proof of nationality
For International Individuals
- Professional photo
- Identity card
- Passport
- Driving licence
- Name and date of birth
- Address
- Nationality
- Identity documents like ID or passport
For Corporate Entities
- Registered office in Switzerland
- Commercial register
- Ultimate Beneficial Owner (UBO)
- Note: These requirements may vary depending on the specific case or conditions.
KYC in Switzerland Amidst Crypto Growth
Virtual assets like cryptocurrencies are legal in Switzerland, but their transactions require licensing and regulation by FINMA. Virtual Asset Service Providers (VASPs) must provide Personally Identifiable Information (PII) of customers involved in crypto transactions as part of the KYC process. This includes:
- Client’s name
- Client’s account number or transaction reference number
- Client’s address, date, and place of birth, client number, or national ID number
- Beneficiary’s name and address
Challenges and Recommendations
The FINMA allows Swiss-based financial institutions to use online identity verification to fulfill due diligence requirements under the Swiss Anti-Money Laundering Act. However, with deepfake technology becoming increasingly sophisticated, ensuring secure online ID and verification processes is crucial.
To combat these threats, the FATF recommends that financial institutions seek assurance through testing and certification by government or approved expert bodies. Financial institutions can also participate in public sector regulatory sandboxes to assess digital ID systems’ assurance levels.
KYC Software Programs
Many KYC, AML, and compliance software programs are available for medium to large-scale banks and companies offering legal services, fund management, and administration.
Bolder Group’s Assistance
At Bolder Group, we stay informed about the latest regulations and trends in the financial world. With decades of experience in fund administration, governance, and compliance solutions, we can assist you with your KYC needs in Switzerland. Contact our team for assistance.