Financial Crime World

Switzerland’s Anti-Money Laundering Regulations

Overview

Switzerland’s banking regulations for combating money laundering are based on two pillars: criminal law and anti-money laundering legislation. This article provides an overview of Switzerland’s anti-money laundering framework, including its key laws, regulations, and institutions.

Pillars of Anti-Money Laundering Regulations

Criminal Law

  • Article 305bis of the Swiss Criminal Code makes money laundering a punishable offense.
  • Individuals who engage in money laundering activities can be punished under criminal law.

Anti-Money Laundering Legislation

  • The Federal Act on Combating Money Laundering and Terrorist Financing in the Financial Sector (Anti-Money Laundering Act, AMLA) requires financial intermediaries to comply with due diligence and disclosure requirements.
  • AMLA aims to prevent money laundering and financing of terrorism.

Key Institutions

Swiss Financial Market Supervisory Authority (FINMA)

  • FINMA is responsible for monitoring compliance with anti-money laundering regulations by financial service providers such as banks, securities firms, insurers, and institutions under the Collective Investment Schemes Act.
  • FINMA issues a detailed ordinance in relation to AMLA, known as the FINMA Anti-Money Laundering Ordinance (FINMA AMLO).

Money Laundering Reporting Office (MROS)

  • MROS is responsible for receiving reports from financial intermediaries on suspected money laundering activity.

Compliance Requirements

Due Diligence and Disclosure

  • Financial intermediaries must verify the identity of contracting partners and identify beneficial owners of assets brought into the financial system.
  • If business relationships or transactions appear unusual or indicate potential money laundering activity, financial intermediaries must clarify the financial background and purpose.

Organizational Measures

  • Financial intermediaries must implement organizational measures such as issuing internal directives, training staff, and performing inspections.
  • If there is suspicion of money laundering in a business relationship, financial intermediaries must submit a report to MROS.

Industry-Specific Regulations

  • Banks and securities firms are governed by the Agreement on the Swiss banks’ code of conduct with regard to the exercise of due diligence (CDB 20).
  • Insurers may choose to be supervised by FINMA or join the self-regulatory organization of the Swiss Insurance Association (SRO-SIA).

Conclusion

Money laundering is defined as channeling funds from illegal activity into the legitimate financial system, broken down into three phases: placement, layering, and integration. Financial intermediaries must comply with stringent due diligence and reporting requirements to prevent money laundering, enhancing the credibility and proper functioning of the financial system.

This article provides an overview of Switzerland’s anti-money laundering framework, including its key laws, regulations, and institutions.