Financial Crime World

Switzerland Strengthens Anti-Money Laundering Measures Amid Increased Risks

Enhancing Due Diligence Obligations for Financial Intermediaries

In a move to strengthen its anti-money laundering (AML) framework, Switzerland has announced plans to enhance due diligence obligations for financial intermediaries. The revised measures aim to address increased risks in the global financial landscape and ensure that the country remains at the forefront of combating money laundering and financing of terrorism.

Key Changes

  • Financial intermediaries subject to supervision by FINMA will be required to develop a risk-based approach to identifying and verifying customer identities.
  • Customers will be categorized into two groups: those presenting a normal risk of money laundering and those posing a high risk.
    • High-risk customers, including those with complex ownership structures or ties to countries known for money laundering and terrorist financing, will face enhanced due diligence requirements.

Impact on the Banking Sector

  • The banking sector has already implemented the risk-based approach, with regular examinations conducted by FINMA to ensure compliance.
  • Non-banking financial intermediaries subject to supervision by the Swiss Insurance Association (ASIP) or a self-regulatory organization (SRO) will also be required to adopt similar measures.

Changes for the Insurance Sector

  • Financial intermediaries will be required to identify and verify customer identities and beneficial ownership for contracts concluded prior to 1998.
  • This is aimed at addressing gaps in the existing regulatory framework.

Correspondent Banking Relationships

  • The revised AML measures will require specific requirements for correspondent banking relationships, which are considered higher-risk due to their potential for facilitating money laundering and terrorist financing.

Why Switzerland’s Revised AML Measures Matter

  • Switzerland has a long history of being at the forefront of combating financial crime, with its AML framework considered one of the most robust in the world.
  • The revised rules aim to enhance transparency and trust in Switzerland’s financial system, while also addressing increasing pressure from international bodies and the European Union to strengthen measures.

Key Highlights

  • Financial intermediaries will be required to adopt a risk-based approach to customer identification and verification.
  • High-risk customers will face enhanced due diligence requirements.
  • Insurance companies will be required to identify and verify customer identities and beneficial ownership for contracts concluded prior to 1998.
  • Correspondent banking relationships will require specific regulatory requirements.

Background

Switzerland’s financial sector is considered one of the most stable and reliable in the world, with a strong reputation for protecting investor assets and ensuring financial stability. The revised AML measures are designed to address evolving money laundering and terrorist financing risks while maintaining Switzerland’s position as a global leader in combating financial crime.

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