FATF removes Switzerland from AML enhanced scrutiny regime

Monday, 23 October 2023
Switzerland is being removed from the Financial Action Task Force's (FATF’s) enhanced follow-up regime, after the latest FATF follow-up report re-rated its anti-money laundering (AML) regime from partially compliant to largely compliant on two key FATF recommendations.

FATF's last mutual evaluation of Switzerland in 2016 identified shortcomings in the country's implementation of nine of the 40 FATF recommendations. Two of the most important of these were Recommendation 10, concerning the verification of customer identities during the due-diligence process, and Recommendation 40, regarding international cooperation between countries' competent authorities.

The organisation’s latest evaluation notes that Switzerland made significant progress with the revision of its Anti-Money Laundering Act adopted in March 2021, especially concerning customer due-diligence. The revised Act came into force at the beginning of 2023, implementing most of FATF's 2016 recommendations for Swiss AML reform and imposing due-diligence and beneficial ownership reporting obligations on many financial intermediaries.

Switzerland now has eight recommendations rated compliant, 29 recommendations rated largely compliant and three rated partially compliant. 'The recognition of Switzerland's progress by the FATF, the leading intergovernmental body in this area, is an important achievement for the country', commented the Swiss Federal Council (the Federal Council). However, it believes that further measures will be necessary to satisfy FATF's next evaluation, especially in the area of transparency of legal entities and the provision of legal advice on the structuring of companies and trusts.

Moreover, the international standards set by FATF are also constantly evolving. One of the most recent and extensive revisions is the standard on the transparency of legal persons, which has prompted the Federal Council to propose the introduction of a register of beneficial owners and due-diligence requirements for high-risk activities in legal professions. The consultation on these measures began on 30 August 2023 and will last until 29 November 2023. The Federal Council will submit the dispatch to parliament in 2024.

The next FATF mutual evaluation of Switzerland is expected to take place in 2027 or 2028, when the country's AML regime will once again be comprehensively re-evaluated.


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