Switzerland Cracks Down on Money Laundering with New Anti-Money Laundering Act (AMLA)

Starting January 1, 2023, Switzerland’s financial sector is undergoing significant changes with the implementation of the new Anti-Money Laundering Act (AMLA). This legislation aims to enhance legal certainty and bolster Switzerland’s position as a global financial hub. Several modifications centering on the verification of Beneficial Owners, client data obligations, and transparency for associations are worth noting.

I. Verification of Beneficial Owners

Under the new regulations, financial intermediaries will face stricter due diligence duties for identifying and verifying Beneficial Owners’ identities. This requirement stems from increasing international scrutiny. financial intermediaries can no longer solely rely on a client’s declaration concerning their Beneficial Owners. Instead, they must critically assess the information available using a risk-based approach, potentially consulting external services to obtain accurate information.

• Stricter due diligence duties for financial intermediaries
• Cannot solely rely on client’s declaration concerning Beneficial Owners
• Assess information available using a risk-based approach
• Consult external services to obtain accurate information

II. Client Data Obligations

Paragraph 1bis of Section 7 AMLA calls for financial intermediaries to periodically update their clients’ records to ensure accuracy and make necessary changes based on the risk posed by each client. This burden of updating client information applies to all relationships – high and low risk – and may involve conducting a new risk assessment for clients established prior to the new regulation.

• Periodic updates of clients’ records
• Make necessary changes based on the risk posed by each client
• Updating process applies to all clients, regardless of risk level
• Conducting a new risk assessment for clients established prior to the regulation

III. Transparency for Associations

To address concerns regarding transparency gaps in non-profit organizations and related risks related to terrorist financing, significant changes have been introduced to the law governing associations.

• Non-profit organizations can avoid registering with the commercial register if they don’t engage in commercial activities or don’t have their accounts audited
• Organizations collecting or distributing funds abroad now face new obligations to maintain a members’ list

Members’ List Requirements

Non-profit organizations collecting or distributing funds abroad must now maintain a members’ list including:

• Full name or business name
• Address
• Availability within Switzerland

Upcoming Challenges for Financial Professionals

Swiss anti-money laundering law offers flexibility in determining the most effective means for verifying Beneficial Owners’ identities. However, it’s essential to exercise prudence and follow a risk-based approach while assessing the validity of provided information. Compliance with the new AMLA regulations will entail costs but is necessary to protect businesses from potential legal and reputational risks and ensure regulatory adherence.

• Exercise prudence and follow a risk-based approach
• Protect businesses from potential legal and reputational risks
• Ensure regulatory adherence

Reviewing Policies and Procedures

Swiss financial intermediaries are encouraged to review their policies and procedures to ensure compliance with the new client information update requirements. Non-profit organizations must take proactive steps to understand their obligations regarding registering and maintaining a members’ list within the 18-month transition period provided by the regulation.

• Financial intermediaries should review their policies and procedures
• Non-profit organizations should understand their obligations regarding registering and maintaining a members’ list
• Review and compliance to be completed within the 18-month transition period