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Switzerland’s Financial Sector Under Scrutiny: Compliance and Regulation Take Center Stage

As Switzerland prepares for its 5th round of mutual evaluation by the Financial Action Task Force (FATF), the country is gearing up to make significant changes to its anti-money laundering (AML) and counter-terrorism financing (CFT) regulations. The move comes as the global financial community continues to crack down on illicit activities, with Switzerland’s financial sector facing increased scrutiny.

Enhanced Due Diligence and Expanded Obliged Entities

Recommendations 22 and 23 of the FATF’s previous evaluation may lead to further guidance on due diligence, potentially broadening the scope of obliged entities. This could require financial institutions to implement enhanced customer due diligence procedures, including monitoring for suspicious transactions and reporting potential red flags.

Terrorist Financing and Hamas Ban

In February 2024, the Swiss government proposed banning Hamas and related organizations, citing concerns about terrorism financing and the need to prevent Switzerland from being used as a haven for such activities. This move follows a similar push by the Wolfsberg Group in March 2024, which called for global coordination on official lists of suspected terrorists and terrorist organizations.

Increased Enforcement Actions

In 2023, Swiss authorities froze CHF 7.7 billion in assets linked to Russian money, highlighting the country’s commitment to enforcing AML/CFT regulations. Sanctions circumvention and evasion are likely to remain a focus for regulators in 2024, with international cooperation playing a crucial role.

Transparency Register for Beneficial Owners

Switzerland is also introducing a Federal Act on the Transparency of Legal Entities (TLEA), which will require companies to disclose beneficial ownership information. The move aims to combat shell companies and their nefarious uses, with Moody’s research identifying red flags among companies registered in Switzerland.

Compliance Support for Financial Institutions

As the financial sector adapts to these changes, compliance and regulatory expertise are more crucial than ever. Moody’s offers a range of services, including beneficial ownership data, automated due diligence solutions, and enhanced due diligence tools to support AML/CFT compliance programs.

“We understand the importance of staying ahead of the curve in terms of compliance and regulation,” said [Name], Director at Moody’s. “Our expertise can provide valuable insights and support for financial institutions navigating these complex changes.”

Get in Touch

If you would like to discuss how Moody’s can support your AML/CFT program, please contact us today. We’re committed to helping the financial sector stay compliant and mitigate risk in an ever-changing regulatory landscape.

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