Strengthening the fight against money laundering: Measures

The bill to strengthen the fight against money laundering wants to introduce new measures. Here is an overview of these.

Main measures

Register of beneficial owners and other transparency measures
Legal entities (under Swiss law and certain categories under foreign law) must identify their beneficial owner and take verification steps. A federal register contains information on the beneficial owners of companies and other entities subject to the requirement, which must report their information to the register. Persons acting in a fiduciary capacity as directors or shareholders are also subject to transparency obligations. The register is managed by the Federal Office of Justice. A new unit within the FDF will verify the information in the register and may issue penalties for breaches of the new obligations introduced by the law. The register is accessible to the competent authorities and financial intermediaries, as well as to advisers within the meaning of the AMLA and lawyers exercising an activity subject to due diligence obligations (Art. 13a ff preliminary draft of the Lawyers Act) (for their performance of due diligence), but not to the public. Financial intermediaries and the authorities designated by law will have access to the register and will be obliged to report discrepancies (discrepancy reporting).

Register of beneficial owners and other transparency measures

Legal entities (under Swiss law and certain categories under foreign law) must identify their beneficial owner and take verification steps.
A federal register contains information on the beneficial owners of companies and other entities subject to the requirement, which must report their information to the register.
Persons acting in a fiduciary capacity as directors or shareholders are also subject to transparency obligations.
The register is managed by the Federal Office of Justice. A new unit within the FDF will verify the information in the register and may issue penalties for breaches of the new obligations introduced by the law.
The register is accessible to the competent authorities and financial intermediaries, as well as to advisers within the meaning of the AMLA and lawyers exercising an activity subject to due diligence obligations (Art. 13a ff preliminary draft of the Lawyers Act) (for their performance of due diligence), but not to the public.
Financial intermediaries and the authorities designated by law will have access to the register and will be obliged to report discrepancies (discrepancy reporting).

Introduction of anti-money laundering obligations for certain activities of non-financial professions
Lawyers, notaries, independent legal practitioners, accountants and providers of specialist corporate services are subject to due diligence obligations when they engage in certain highrisk activities (in particular: the creation, operation or domiciliation of legal entities or trusts, and real estate transactions). Those who recently became subject to the regime ("advisers") and lawyers who carry out an activity subject to due diligence obligations must identify their clients, the beneficial owner, the purpose and the nature of the transaction. Advisers and lawyers who carry out an activity subject to due diligence obligations must report any reasonable grounds for suspicion to MROS. However, lawyers and notaries are exempt if the information is covered by professional secrecy and if they do not carry out financial transactions for their clients. Compliance with the new obligations is supervised by a self-regulatory organisation (exception: cantonal supervisory authority for lawyers).

Introduction of anti-money laundering obligations for certain activities of non-financial professions

Lawyers, notaries, independent legal practitioners, accountants and providers of specialist corporate services are subject to due diligence obligations when they engage in certain highrisk activities (in particular: the creation, operation or domiciliation of legal entities or trusts, and real estate transactions).
Those who recently became subject to the regime ("advisers") and lawyers who carry out an activity subject to due diligence obligations must identify their clients, the beneficial owner, the purpose and the nature of the transaction.
Advisers and lawyers who carry out an activity subject to due diligence obligations must report any reasonable grounds for suspicion to MROS. However, lawyers and notaries are exempt if the information is covered by professional secrecy and if they do not carry out financial transactions for their clients.
Compliance with the new obligations is supervised by a self-regulatory organisation (exception: cantonal supervisory authority for lawyers).

Other measures

Self-regulatory organisations (SROs)
The measures are intended to anticipate a likely change in case law concerning the classification of penalties imposed by AMLA self-regulatory organisations: in view of developments in anti-money laund ring legislation, the Federal Supreme Court may consider that penalties should be governed by public law in the future. The new regulations propose to: introduce an appropriate legal basis for the standards adopted by the SROs for the implementation of the due diligence obligations; provide an appropriate framework for SRO supervision by introducing into the law the possibility of initiating formal proceedings, the obligation for the parties concerned to cooperate and the SRO's right to appoint an external investigator; specify the types of measure that SROs may adopt; while they will no longer be permitted to impose financial penalties, they will be able to take administrative measures to enforce or reestablish legal order; give the FDF the possibility to impose financial penalties in serious cases.

Self-regulatory organisations (SROs)

The measures are intended to anticipate a likely change in case law concerning the classification of penalties imposed by AMLA self-regulatory organisations: in view of developments in anti-money laund ring legislation, the Federal Supreme Court may consider that penalties should be governed by public law in the future.

The new regulations propose to:

introduce an appropriate legal basis for the standards adopted by the SROs for the implementation of the due diligence obligations;
provide an appropriate framework for SRO supervision by introducing into the law the possibility of initiating formal proceedings, the obligation for the parties concerned to cooperate and the SRO's right to appoint an external investigator;
specify the types of measure that SROs may adopt; while they will no longer be permitted to impose financial penalties, they will be able to take administrative measures to enforce or reestablish legal order;
give the FDF the possibility to impose financial penalties in serious cases.

Real estate
Threshold for cash transactions that trigger due diligence obligations removed (traders) Due diligence obligations introduced for lawyers, notaries and other advisers with regard to the purchase and sale of real estate (see section 2). Entry of foreign legal entities that own real estate in Switzerland in the register of beneficial owners (see section 1).

Precious metals and precious stones
Threshold for cash transactions that trigger due diligence obligations lowered to CHF 15,000 (traders).

Unified format for reporting to the Money Laundering Reporting Office (MROS)
A provision will require those who draft reports to comply with the uniform data standard for submitting reports to MROS.

Transparency of trusts
The bill requires trustees domiciled/operating in Switzerland to collect and maintain information on beneficial owners. The rules applicable to professional trustees already exist in the anti-money laundering legislation. The regulations provided for in the Transparency Act would be limited to non-professional trustees, in order to ensure that they are subject to these obligations in the future. A corresponding criminal law provision will ensure that they are enforced.

Transparency of trusts

The bill requires trustees domiciled/operating in Switzerland to collect and maintain information on beneficial owners.
The rules applicable to professional trustees already exist in the anti-money laundering legislation. The regulations provided for in the Transparency Act would be limited to non-professional trustees, in order to ensure that they are subject to these obligations in the future. A corresponding criminal law provision will ensure that they are enforced.

Obligation to take the requisite steps to prevent non-compliance with penalties under the AMLA
The revision aims to strengthen the organisational obligations of those subject to the AMLA and lawyers subject to due diligence obligations, as they will be required to identify, mitigate and monitor the risks associated with penalties under the AMLA. Consequently, the new regulations will require them to incorporate into their organisational measures appropriate steps to prevent breaches of coercive measures based on the AMLA.

Obligation to take the requisite steps to prevent non-compliance with penalties under the AMLA

The revision aims to strengthen the organisational obligations of those subject to the AMLA and lawyers subject to due diligence obligations, as they will be required to identify, mitigate and monitor the risks associated with penalties under the AMLA. Consequently, the new regulations will require them to incorporate into their organisational measures appropriate steps to prevent breaches of coercive measures based on the AMLA.

Arrangements for the exchange of information between FINMA and the supervisory bodies
The proposal creates a legal basis for the exchange of information between FINMA, the supervisory bodies and self-regulatory organisations.