Financial Crime World

Switzerland’s Fight Against Money Laundering and Terror Financing: What’s Next for Directors and Senior Management

Strengthening Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) Measures

In a move to enhance its AML/CFT framework, Switzerland is set to increase monitoring and reporting of progress made in implementing its anti-money laundering and counter-terrorist financing measures. This comes as the country prepares for its 5th round of mutual evaluation by the Financial Action Task Force (FATF).

Increased Scrutiny on Due Diligence Practices

As a result, directors and senior management of Swiss financial institutions can expect increased scrutiny on their due diligence practices, particularly with regards to recommendations 22 and 23. The Swiss government has proposed broadening the scope of obliged entities, potentially mirroring the EU’s 6th anti-money laundering directive.

Proposed Amendments to Combat Terrorism

In February 2024, the Swiss government tabled a proposal to ban Hamas and related organizations, citing the need for a “preventive and repressive effect” on terrorism and to prevent Switzerland from being viewed as a haven for terrorist financing. This move was echoed by the Wolfsberg group in March 2024, which called for the provision of official lists of suspected terrorists and terrorist organizations.

Enforcement Actions Expected to Increase

Enforcement actions are also expected to increase, with the US Department of Justice imposing a $123 million fine on Pictet in December 2023 for conspiring to facilitate tax evasion. Tax evasion is increasingly being targeted by international regulators as a predicate offense to money laundering.

The Swiss Confederation has also proposed a Federal Act on Transparency of Legal Entities (TLEA), which would introduce a transparency register for beneficial owners of legal entities. This change is expected to impact 500,000 legal entities across the country and requires them to disclose detailed information about their beneficial owners.

How Moody’s Can Support Your AML/CFT Program

Moody’s offers automated solutions for due diligence and enhanced due diligence, as well as risk management and AML/CFT compliance programs tailored to Switzerland’s national regulations. Our comprehensive data, advanced analytical tools, global reach, and expertise can support financial institutions in addressing the increasing demands of AML/CFT compliance.

Stay Ahead of the Changes

As directors and senior management of Swiss financial institutions, it is essential to stay ahead of these changes and ensure that your organization is equipped to meet each AML/CFT requirement. Contact us today to learn how Moody’s can support your AML/CFT program for risk management and compliance.

Key Takeaways:

  • Switzerland is set to increase monitoring and reporting of progress made in implementing its AML/CFT framework.
  • Directors and senior management of Swiss financial institutions can expect increased scrutiny on their due diligence practices, particularly with regards to recommendations 22 and 23.
  • Proposed amendments aim to combat terrorism and prevent Switzerland from being viewed as a haven for terrorist financing.
  • Enforcement actions are expected to increase, with tax evasion being targeted as a predicate offense to money laundering.
  • The proposed Federal Act on Transparency of Legal Entities (TLEA) aims to introduce a transparency register for beneficial owners of legal entities.