Financial Crime World

Swiss Crackdown on Financial Crime: Strengthening Anti-Money Laundering Measures

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Switzerland has taken a significant step to curb financial crime by strengthening its anti-money laundering (AML) regulations, focusing on transparency and accountability among financial institutions.

Background

Money laundering is a criminal offense punishable by law in Switzerland. According to FINMA, the country’s financial market supervisor, it is essential to combat this menace effectively.

Pillars of Regulation

To achieve this goal, two pillars of regulation have been put in place: criminal prosecution and supervisory oversight.

Criminal Prosecution

Financial intermediaries such as banks, securities firms, insurers, and institutions under the Collective Investment Schemes Act are required to comply with due diligence and disclosure requirements set out in the Anti-Money Laundering Act (AMLA). These measures include:

  • Verifying the identity of contracting partners
  • Identifying beneficial owners of assets brought into the system
  • Implementing organizational measures to prevent money laundering and terrorism financing, including:
    • Staff training
    • Internal directives
    • Inspections

Supervisory Oversight

FINMA engages recognized audit firms to monitor compliance among its supervised institutions. Self-regulatory organizations (SROs) and supervisory organizations (SOs) also conduct their own monitoring and reporting requirements. If any breaches of the law are detected, FINMA takes corrective measures and may impose sanctions.

Industry-Specific Regulations

Industry-specific regulations apply to specific sectors, such as:

  • Banking: Compliance with the Swiss Bankers Association’s code of conduct on due diligence
  • Securities: Compliance with the AMLA requirements
  • Insurance: Supervision by FINMA or joining the self-regulatory organization of the Swiss Insurance Association (SRO-SIA)

Consequences of Non-Compliance

The consequences of non-compliance are severe. Financial intermediaries that fail to meet AMLA requirements may face:

  • Penalties and fines
  • Sanctions imposed by SROs and SOs

Conclusion

Switzerland’s anti-money laundering regime is designed to prevent the misuse of its financial system for criminal purposes. By strengthening regulations and increasing transparency, FINMA aims to maintain the credibility and proper functioning of the Swiss financial sector.