Combating money laundering
Over the past few decades, Switzerland has built up an intricate apparatus to combat money laundering and terrorist financing. It now has strict regulation in place in this respect. It rigorously implements the international standards of the Financial Action Task Force (FATF) and the Global Forum and plays an active role in these international bodies.
Switzerland’s apparatus for the fight against money laundering
The Swiss apparatus for combating money laundering is constantly being expanded and updated. It currently includes provisions in the Swiss Criminal Code (Arts 305bis and 305ter SCC) as well as the Federal Act on Combating Money Laundering and Terrorist Financing and its Ordinance (AMLA and AMLO), the Swiss Financial Market Supervisory Authority FINMA’s Ordinance on Combating Money Laundering and Terrorist Financing in the Financial Sector (AMLO-FINMA), a number of FINMA circulars with relevance for banks, and the Swiss banks’ code of conduct with regard to the exercise of due diligence (CDB) issued by the Swiss Bankers Association.
Switzerland also implements the 40 recommendations on combating money laundering and terrorist financing published by the Financial Action Task Force (FATF), and its compliance with these is regularly assessed through mutual evaluations.
The CDB was introduced in 1977 and sets out banks’ duties with regard to identifying the contracting partner and establishing the identity of the beneficial owner. It also prohibits active assistance in the flight of capital and tax evasion. In these respects, the CDB is at the centre of Switzerland’s pioneering efforts to combat money laundering.
The material provisions of the CDB (Arts 1-57 CDB) have the same status as an ordinance due to a reference in Art. 35 AMLO-FINMA and thus apply to all financial intermediaries as defined in Art. 2 para. 2 lets a-d AMLA (Art. 3 para. 1 AMLO-FINMA). The procedural provisions (Art. 58 CDB 20 onwards), meanwhile, constitute liberal self-regulation in the form of a contract between the SBA and its members as well as further banks in Switzerland. Both the CDB and the SBA’s commentary on it are updated periodically. Work on revising CDB 2020 and the SBA commentary is currently under way. The revised CDB and commentary will be available from 1 January 2025 at the earliest.
The banks and FINMA mandate statutory auditors to review the banks’ compliance with the CDB. Special investigators and a CDB Supervisory Board assess potential violations. In the event of a violation of the CDB, the bank at fault can be fined up to CHF 10 million. This sanctioning system operates in parallel with FINMA’s enforcement activity.
The Financial Action Task Force (FATF) is an international expert group based in Paris that sets global standards on money laundering. It was founded by the G7 states in 1989 and now has 37 member states, including Switzerland. The FATF has published 40 recommendations on combating money laundering and terrorist financing.
It conducts regular assessments, known as mutual evaluations, to check compliance with its recommendations in the individual member states.
Switzerland’s fourth mutual evaluation was conducted in the spring of 2016 and assessed its implementation of the recommendations as revised in 2012. In December 2016, the FATF published the fourth mutual evaluation report, stating that Switzerland’s overall performance was good and that its results were above average in comparison with the other countries that had already undergone evaluation (FATF Mutual Evaluation Report on Switzerland). The FATF recognised the quality of the Swiss apparatus for combating money laundering and terrorist financing and rated it as either “compliant” or “largely compliant” with regard to 31 of the 40 recommendations. Switzerland’s next comprehensive mutual evaluation is scheduled to take place in 2025.
The Swiss legislation on money laundering is revised on an ongoing basis, in part to take account of international developments and the latest FATF risk assessments.
The most recent revision of the Anti-Money Laundering Act (AMLA) was adopted by the Swiss Parliament in March 2021 and is expected to enter into force on 1 January 2023. The revised Act includes the following new duties in particular:
- Verifying the beneficial owner’s details
- Regularly updating the customer’s details
Following the revision of the AMLA, the Federal Council’s Anti-Money Laundering Ordinance (AMLO) has also been revised; the SBA took part in the consultation and submitted its response. The amendments to the Ordinance flesh out the measures introduced by the AMLA revision. Relevant provisions on reporting have also been transposed from the money laundering ordinances of the supervisory authorities and the Federal Office of Justice and Police to the Federal Council’s ordinance.
To ensure that the revisions of the AMLA and AMLO are enforced, the Ordinance of the Swiss Financial Market Supervisory Authority on Combating Money Laundering and Terrorist Financing in the Financial Sector (AMLO-FINMA) has also been revised. The consultation, in which the SBA also participated (response), lasted until 10 May 2022.
In principle, the AMLO-FINMA does not contain provisions governing specific details of establishing the identity of the beneficial owner and periodically validating whether client data are up to date. Only Art. 26 AMLO-FINMA, concerning the requirements for internal directives, is to be supplemented to the effect that financial intermediaries must issue an internal directive on the criteria for validating whether client data are up to date. Moreover, FINMA is repealing the implementing provisions on reporting in the AMLO-FINMA, which have been transferred to the Federal Council’s AMLO.
According to the most recent information, the AMLA along with the AMLO and AMLO-FINMA are to enter into force on 1 January 2023.
President; Avocat Conseil, Athena Attorneys-at-Law, Geneva
Michel Y. Dérobert
Member; former Director of the Association of Swiss Private Banks (VSPB), Genthod
Member; lawyer, Centro Studi Villa Negroni, Vezia
Member; lawyer, LL.M., former Managing Director and Senior Advisor, General Counsel Division, Credit Suisse AG, Muri
Member; lawyer, former General Counsel at ZKB (1992–2016), judge at the Zurich Commercial Court, Au
Member; lawyer, LL.M., Prof. of Administrative Law at the Fribourg University Law Faculty, Givisiez
Secretary; lawyer, Friedli & Schnidrig Attorneys-at-Law, Bern
Deputy secretary; lawyer, Des Gouttes & Associés, Geneva
Investigator; lawyer, CSNLAW, Lugano
Investigator; lawyer, CMS von Erlach Poncet AG, Zurich
Didier de Montmollin
Investigator; lawyer, DGE Attorneys at Law, Geneva
Investigator; lawyer, Lüscher Bischoff Rechtsanwälte, Zurich
Investigator; lawyer, Massard & Rossi Avocats au barreau, Neuchâtel
Investigator; lawyer, Wartmann Merker Attorneys at Law, Zurich
Links & Documents
Agreement on the Swiss banks’ code of conduct with regard to the exercise of due diligence (CDB 20) (2020)
Commentary on the Agreement on the Swiss banks’ code of conduct with regard to the exercise of due diligence (CDB 20)
Leading Cases der Aufsichtkommission VSB 2. Halbjahr 2021 (1. Juli bis 31. Dezember 2021)
Leading Cases der Aufsichtkommission VSB 1. Halbjahr 2021 (1. Januar bis 30. Juni 2021)
Leading Cases der Aufsichtskommission VSB 2. Halbjahr 2020 (1. Juli bis 31. Dezember 2020)