Swiss Financial Institutions Face Stringent Regulatory Requirements

Combating Money Laundering and Terrorism Financing

The Swiss regulatory body has a multitude of factors to consider when evaluating an application from a financial institution, with one key aspect being compliance with complex national laws and international treaties aimed at preventing money laundering and terrorism financing. The Anti-Money-Laundering Act (GwG) is specifically designed for financial intermediaries, mandating the exercise of due diligence in all financial transactions to combat these illicit activities.

Regulatory Framework

FINMA, Switzerland’s financial market regulator, sets forth guidelines on:

• Client Transaction Monitoring: Regular monitoring of client transactions to identify suspicious activity
• Onboarding Procedures: Strict procedures for onboarding new clients to verify their identity and assess risk
• Audit Frequencies: Regular audits to ensure compliance with AML regulations and internal policies
• Reporting Suspected Transactions: Processes for reporting suspected money laundering or terrorist financing activities

The Role of the Financial Intelligence Unit (MROS)

MROS receives information about potential money laundering or terrorist financing activities by individuals or entities and takes action to halt such transactions, such as freezing funds. MROS also forwards this information to international bodies focused on anti-money laundering efforts.

Independent AML Officer

To adhere to these regulatory demands and fulfill legal obligations, financial institutions must have an independent AML officer in place who can oversee and evaluate the effectiveness of the company’s AML procedures. In smaller or less complex companies, the same person may handle both client onboarding, risk management, and compliance. Alternatively, this role can be outsourced to a separate, independent company providing External AML Officer services according to contract.

Documentation Required for AML Officer

During the application process for a financial license, the list of documents required for the AML officer is typically similar to that for the director of the company.

Conclusion

These stringent regulations are in place to ensure Switzerland’s position as a global leader in combating money laundering and terrorism financing. By adhering to these regulatory demands, financial institutions can help prevent illicit activities and maintain trust in the Swiss financial system.