Financial Crime World

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Switzerland Takes Aim at AML/CFT Compliance: Tougher Sanctions Loom

In a bid to bolster its anti-money laundering (AML) and counter-terrorist financing (CFT) measures, Switzerland is set to introduce stricter regulations and enforcement actions in the coming year. The country has committed to inform the Financial Action Task Force (FATF) of its progress in implementing AML/CFT reforms as part of its 5th round of mutual evaluation.

One key area of focus is the proposed ban on Hamas and related organizations, which could have a “preventive and repressive effect” on terrorism. The move is expected to lead to enhanced CFT controls on clients and third parties by financial institutions.

Increased Enforcement Actions

Enforcement actions are also set to increase, with Switzerland’s Financial Market Supervisory Authority (FINMA) cracking down on sanctions circumvention and evasion. In 2023, FINMA froze CHF7.7 billion in assets held by Swiss banks suspected of being linked to Russian money laundering activities.

Warning from the US Department of Justice

The US Department of Justice’s $123 million fine against Pictet in December 2023 for conspiring to facilitate tax evasion serves as a warning to financial institutions: failure to comply with AML/CFT requirements will be met with severe penalties. Tax evasion is a predicate offense to money laundering and increasingly a focus of international regulators.

Switzerland has also proposed the TLEA, which would introduce a transparency register for beneficial owners of legal entities. The new law aims to combat shell companies and their nefarious uses by requiring legal entities to disclose the details of their beneficial owners, including:

  • Full name
  • Birth date
  • Nationality
  • Residence
  • Any relevant data pertaining to control

The TLEA is expected to impact over 500,000 legal entities in Switzerland, including limited companies, associations, foundations, and investment companies. The regulation targets shell companies and their use for illicit activities, such as money laundering and terrorist financing.

Moody’s Solutions for AML/CFT Compliance

To support financial institutions in meeting these new requirements, Moody’s offers a range of solutions, including:

  • Comprehensive data on beneficial ownership and control structures
  • Advanced analytical tools to identify potential risks associated with ultimate beneficial owners
  • Expertise and reputation in the banking and financial industry

As Switzerland’s AML/CFT landscape evolves, financial institutions must be prepared to adapt to new regulations and enforcement actions. With Moody’s support, they can ensure compliance with national and international regulatory requirements.

Contact Us for More Information

For more information on how Moody’s can support your AML/CFT program for risk management and compliance, please contact us today.