Swiss to strengthen AML Regulation
On 30 August 2023, the Swiss Federal Council initiated a consultation on a bill to bolster the anti-money laundering (AML) framework. The objective is to enhance Switzerland’s reputation and competitiveness as a financial hub. The proposal will align measures with international standards, particularly those set by the Financial Action Task Force (FATF) on combating money laundering and terrorist financing.
Key provisions:
Federal Transparency register: A non-public register will be introduced, mandating Swiss legal entities to list their beneficial owners. The Federal Department of Justice and Police will manage this register, leveraging existing infrastructure and expertise. An audit unit within the Federal Department of Finance will ensure quality by conducting checks and imposing penalties when necessary.
AML Due Diligence rules will be extended to certain consultancy activities, especially legal advice, which are deemed high-risk. Other examples of high-risk activities include founding and structuring of companies and real estate transactions. The professional secrecy for legal professions, lawyers and notaries will be maintained.
Additional measures:
· Preventive measures against violations or circumventions of sanctions under embargo legislation.
· The cash transaction threshold in precious metal and stones trading will be reduced from CHF 100,000 to CHF 15,000. Transactions exceeding this limit will be subject to specific due diligence procedures.
· All cash transactions in real estate will be subject to AML due diligence, regardless of the transaction value.
The consultation on the change is expected to conclude on 29 November 2023, with the Federal Councils dispatch to Parliament in 2024.
Implications:
· Swiss legal entities must list their beneficial owners in the register.
· Cash payments in real estate are subject to AML due diligence obligations.
· Cash payments over CHF 15,000 precious metal and stones trading face due diligence obligations.
· Opportunities for new Technology: Need for technological innovation to overcome these requirements both further in the financial sector and additionally in the non-financial sector. The current state of transaction monitoring with financial institutions will need to be changed to reduce the already enhanced level of manual work and human error.
The concerning press release of the Federal Council is linked here.
