Financial Crime World

New Transparency Requirements for Legal Entities

Switzerland is introducing new transparency requirements for legal entities to prevent money laundering and terrorism financing. As of January 2023, all legal entities registered in Switzerland must report their beneficial owners to a new transparency register managed by the Federal Office of Justice (FOJ).

Who Must Report?

Over 500,000 legal entities in Switzerland, including:

  • Companies
  • Foundations
  • Associations
  • Cooperatives
  • Branches of foreign companies

will be required to report their beneficial owners. A simplified registration procedure applies to most of these entities.

What Information Must Be Reported?

Legal entities must report:

  • The identity of their beneficial owners
  • The type and magnitude of control exercised by them

This information must be provided within one month of registering with the commercial register or upon any changes to the beneficial ownership structure.

Who Is a Beneficial Owner?

A beneficial owner is defined as:

  • Any private individual who ultimately controls a legal entity, either alone or together with others, through:
    • Holding at least 25% of the capital or voting rights
    • Exerting significant influence over the company’s decisions If no one meets these criteria, the most senior member of the governing body is deemed to be the beneficial owner.

Access to the Transparency Register

The transparency register is not publicly accessible due to data protection concerns. Access is restricted to:

  • Authorities listed in the legislation
  • Financial intermediaries and advisers subject to anti-money laundering regulations for the purpose of fulfilling their due diligence obligations.

Due Diligence Obligations for Advisers

Advisers, including:

  • Lawyers
  • Notaries
  • Other professionals offering certain services on a professional basis

are now subject to due diligence obligations. These obligations aim to prevent money laundering and terrorism financing by ensuring that advisers conduct thorough background checks on their clients and report suspicious transactions.

Sanctions Provisions

New provisions have been introduced to increase legal certainty regarding the breaching and circumvention of sanctions under the Embargo Act. These provisions are aimed at preventing financial intermediaries from supporting criminal activities.

Real Estate Sector and Precious Metal Dealers

All real estate transactions will now be subject to due diligence obligations, without a threshold limit. Cash payments exceeding CHF 15,000 will also trigger special due diligence obligations.

Further Information

For more information on the new transparency requirements and due diligence obligations, please visit www.admin.ch.

Contact:

  • Name, Federal Department of Finance (FDF) (email address)
  • Name, Swiss Financial Market Supervisory Authority (FINMA) (email address)