Financial Crime World

Swiss Anti-Money Laundering Rules Tighten Up: Financial Intermediaries Face New Obligations

The Swiss government has introduced a new Anti-Money Laundering Act (AMLA) aimed at strengthening the country’s anti-money laundering and combating the financing of terrorism (AML/CFT) framework. The law comes into effect on January 1, 2023, and imposes new obligations on financial intermediaries, including banks, insurance companies, and securities dealers.

New Obligations for Financial Intermediaries

Under the new rules, financial intermediaries must:

  • Adopt a risk-based approach to identify and verify the identities of their clients
    • Verify the identity of beneficial owners, who are individuals or entities that ultimately own or control a client
    • Conduct due diligence on their clients and keep records of this information for at least ten years
  • Update client information periodically, regardless of the risk level
    • Update information about the client’s identity, purpose and objective of the business relationship, and other relevant details
    • Respond promptly to requests from authorities for information or assistance in investigating suspicious transactions

Transparency Requirements for Non-Profit Organizations (NPOs)

The new law introduces transparency requirements for NPOs, which are often used as conduits for money laundering and terrorist financing. NPOs that engage in commercial activities or have their accounts audited must:

  • Register with the commercial register
  • Maintain a list of their members

This will help authorities to track the flow of funds and identify potential suspicious activity.

Consequences of Non-Compliance

Financial intermediaries that fail to comply with the new rules face significant penalties, including fines and even criminal charges.

Improved Cooperation between Financial Institutions and Law Enforcement Agencies

The government has introduced a range of measures to improve cooperation between financial institutions and law enforcement agencies, including:

  • The establishment of a new national AML/CFT authority

Industry Reaction

The Swiss Banking Association (SBA) welcomed the introduction of the new law, saying it would help to strengthen the country’s anti-money laundering regime and protect its reputation as a reliable and secure financial center. However, some critics have raised concerns about the potential costs and burdens imposed on financial intermediaries by the new rules.

Conclusion

In conclusion, the new Swiss Anti-Money Laundering Act is aimed at strengthening the country’s AML/CFT framework and protecting its financial system from money laundering and terrorist financing. Financial intermediaries must adapt to the new rules and adopt a risk-based approach to identify and verify their clients’ identities.