Financial Crime World

Switzerland Strengthens Anti-Money Laundering Regulations: A New Agreement with Panama and Key Developments

Switzerland took a significant step towards strengthening its Anti-Money Laundering (AML) framework by signing a groundbreaking agreement with Panama on February 27, 2024. Let’s explore the details of this agreement and recent developments in Switzerland’s AML regulations.

New Agreement with Panama

  • First electronic transmission of requests: This marks the first time a treaty of this type has authorized the electronic transmission of requests for mutual assistance to fight financial crime and money laundering.
  • Combatting financial crime: The Swiss government aims to tackle financial crime implicating both countries as part of a wider set of changes to Switzerland’s AML framework.

Swiss Anti-Money Laundering Regulations

Switzerland’s AML regulations are governed by the Anti-Money Laundering Act (AMLA) and the Anti-Money Laundering Ordinance (AMLO).

Anti-Money Laundering Act (AMLA)

  • Enacted in 1997 and updated in 2016
  • Outlines the duties of financial intermediaries in preventing, identifying, and reporting suspected money laundering or terrorism financing activities

Anti-Money Laundering Ordinance (AMLO)

  • Sets the practical guidelines for the Act’s implementation
  • Includes due diligence requirements, reporting, and internal control mechanisms

Recent Developments in Swiss AML Regulations (2020-2022)

  1. Swiss Bankers Association’s Agreement

    • Came into effect on January 1, 2020
    • Revised Agreement on the Swiss banks’ code of conduct regarding due diligence

  2. Swiss Parliament Amendments

    • Passed in March 2021
    • Enhanced customer due diligence and transparency, among other areas

  3. Swiss Financial Market Supervisory Authority (FINMA)

    • Revised its Money Laundering Ordinance in October 2022

  4. Switzerland’s FATF Re-ratings

    • Recommendations 10 and 40 re-rated following improvements
    • Addressing technical compliance deficiencies in customer due diligence and international cooperation

Areas for Improvement Identified by FATF

Switzerland was partially compliant in the following areas:

  1. Recommendation 22 and 23 covering designated non-financial businesses and professions
  2. Recommendation 35, pertaining to the effectiveness and proportionate nature of sanctions

Switzerland has committed to addressing these areas in subsequent rounds of mutual evaluation.

Current Developments and Implications for Financial Institutions (2024)

  1. Proposed Ban on Hamas and related organizations

    • Prevent terrorist financing
    • Supported by the Wolfsberg group

  2. Focus on Combating Financing of Terrorism (CFT) controls and enforcement actions

    • Expected in 2024
    • Significant implications for financial institutions and their clients

  3. Proposed Federal Act on the Transparency of Legal Entities

    • Set for implementation in 2024
    • Create a central register of beneficial owners