Switzerland adopts FATF's demands for anti-money laundering reforms

Thursday, 27 June 2019
Switzerland's federal government has formally adopted the anti-money laundering reforms demanded in the Financial Action Task Force's (FATF’s) 2016 mutual evaluation report, requiring financial intermediaries to comply with customer due-diligence obligations.

The draft proposals, as published for consultation in June last year, introduced due-diligence obligations for persons providing services in connection with companies or trusts, as well as for financial intermediaries. These were to be given an explicit duty to verify and maintain up-to-date beneficial ownership information.

Following consultation, the proposals have been somewhat modified. Advisors will not only have to comply with due-diligence obligations and a duty to verify, but will additionally have a new reporting duty. However, the measure will only cover services for domiciliary companies or trusts.

Also, financial intermediaries will be able to terminate a business relationship if they do not receive any feedback within 40 days of submitting a report to the Swiss Money Laundering Reporting Office.

The statement also draws a distinction between the 'right to report', which is being maintained, and the new 'reporting duty'. This will be clarified when the Bill is published.

The measures are not expected to come into force until the start of 2021 at the earliest.

'The proposal will renew Switzerland's defence mechanism for money laundering and terrorist financing by taking account of the latest risk assessments', said the Swiss Federal Council. 'It also implements the Federal Council's financial market policy [of] ensuring international compliance in the area of money laundering.'

Last November, the Swiss government agreed to implement another of FATF's demands, namely the abolition of bearer shares, despite strong criticism from the country's financial sector. That decision was influenced by the OECD Global Tax Transparency Forum's opposition to bearer shares.


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