Financial Crime World

Here is the rewritten article in markdown format:

Switzerland Tightens Anti-Money Laundering and Counter-Terrorism Financing Measures

Zurich, Switzerland - In an effort to strengthen its anti-money laundering (AML) and counter-terrorism financing (CFT) measures, Switzerland will implement several key changes in 2024. The country’s financial sector will face increased scrutiny as authorities aim to prevent the misuse of Swiss banks for illicit activities.

Transparency Register on Beneficial Owners

One of the key initiatives is the introduction of a transparency register on beneficial owners of legal entities, known as the Federal Act on the Transparency of Legal Entities (TLEA). This new law requires companies to disclose the details of their beneficial owners, including:

  • Full name
  • Birth date
  • Nationality
  • Residence
  • Relevant data regarding control

The obligation will apply to around 500,000 legal entities in Switzerland.

Impact on Shell Companies

The TLEA is expected to have a significant impact on shell companies, which are often used for illicit activities such as money laundering and terrorist financing. A recent study by Moody’s found that over 274,000 Swiss-registered companies exhibited red flags related to:

  • Atypical directorship
  • Unequal jurisdiction risks
  • Financial anomalies

Enhanced Due Diligence Requirements

In addition to the TLEA, Switzerland is also set to implement enhanced due diligence requirements on financial institutions. The country’s regulator has proposed a ban on Hamas and related organizations, which will require financial institutions to conduct enhanced CFT controls on clients and third parties.

FATF Mutual Evaluation

The Swiss government has committed to informing the Financial Action Task Force (FATF) of its progress in improving AML/CFT measures as part of its 5th round of mutual evaluation. The country is expected to address several recommendations, including:

  • Providing guidance on due diligence
  • Broadening the scope of obliged entities

Sanctions and Regulatory Focus

Sanctions will be a key focus for Switzerland’s regulator in 2024, with the country’s banking sector already facing significant fines for non-compliance. In 2023, Swiss banks were estimated to hold around CHF 150 billion of Russian money, prompting calls for enhanced CFT controls.

How Moody’s Can Support Your AML/CFT Program

As Switzerland implements these changes, financial institutions will need to ensure they are equipped to address compliance and regulatory requirements at pace. Moody’s offers a range of solutions to support risk management, AML/CFT compliance programs, and due diligence efforts specific to the Swiss national regulations.

Our comprehensive data and advanced analytical tools can help identify potential risks associated with beneficial ownership structures. With our global reach and expertise in the banking and financial industry, we are well-positioned to provide valuable insights and lend expertise to your due diligence process.

For more information on how Moody’s can support your AML/CFT program, please get in touch. We would be delighted to discuss your specific needs and requirements.