News on the revision of the Anti-Money Laundering Act
28 June 2019
On 26 June 2019 the Federal Council published the dispatch of the amended Anti-Money Laundering Act (AMLA) and its draft legislation. At the same time, the report on the results of the consultation procedure was published. The Federal Assembly will discuss the proposal in the forthcoming autumn and winter sessions. The changes are expected to enter into force at the earliest on 1 January 2021. This means that regulation in the area of combating money laundering is making further progress.
FINMA continues to regard the fight against money laundering as a key point of its supervisory activities. The institutions concerned should familiarise themselves at an early stage with the stricter requirements.
Most important changes expected as of 1 January 2021
- Verification of the beneficial owner
The financial intermediary must establish the identity of the beneficial owner and verify the information received. This means in practice that the identity of the beneficial owner must be verified based on meaningful information or data from trustworthy sources in order to ensure that the disclosed beneficial owner is truly the beneficial owner.
- Duty to update all business relationships
The AMLA will now explicitly stipulate that client data must be periodically checked and, if necessary, updated. This also includes general KYC data. The obligation applies to all business relationships regardless of their risk. A risk-based approach only applies with respect to the frequency and scope of the review. The obligation to update has retroactive effect, especially with regard to the establishment of the identity of controlling persons of business relationships opened before 1 January 2016.
- Adjustment of duty to report to the MROS
Contrary to the previous tendency to abolish the reporting right, it is now planned to maintain such right. The legal uncertainty surrounding the terms "right to report" and "obligation to report" that has been prevalent until now is to be clarified at ordinance level. There, the term "justified suspicion" will also be explained. A suspicion is regarded as well-founded, if suspicious indications cannot be cleared up in the course of background investigations. In the absence of clarification within a reasonable period of time, a "simple doubt" can also trigger a reporting obligation.
The 20-day processing period of the Money Laundering Reporting Office (MROS) is planned to be abolished. In return, financial intermediaries will be granted the right to terminate a business relationship with a pending MROS report after a period of 40 days, while maintaining the paper trail, if MROS has not forwarded the report to a criminal prosecution authority.
- Due diligence requirements for advisory
In addition to financial intermediaries and traders, advisors will now also be subject to the AMLA, if they prepare and/or provide commercial services i.a. in connection with the incorporation, management, administration or fund-raising of domiciliary companies and trusts. In the future, compliance with the due diligence obligations of advisors must be verified by an auditing company.
In the time to come, financial intermediaries should examine how they will handle business relationships with such advisors (similar to the handling of business relationships with external asset managers).
- Improvement of transparency for associations with potential risk for financing terrorism
Associations with an increased risk of abuse are to be subject to similar transparency regulations as other legal entities. This applies to organisations, which are mainly involved in the collection or distribution of assets for charitable purposes abroad. In the future, these associations will be subject to registration in the commercial register, will have to keep a register of members and will need to have a representative body domiciled in Switzerland, all according to proposed changes to the Swiss Civil Code.
Financial intermediaries should obtain certain background information on association accounts and, if necessary, verify the entry in the commercial register.
React in time
In order to assess the consequences for your institute, the following questions are crucial:
- Which internal systems and regulations need to be reviewed and, if necessary, adapted?
- What do the changes mean for our risk management and reporting?
- Which processes and controls need to be adapted?
- Which employees need to be trained and how?
We support you
In the field of combating money laundering, we support you with industry-specific know-how as well as tailor-made and practice-oriented solutions. We support and advise you on regulatory projects - from initialisation and implementation to monitoring and conclusion.
- GAP analysis: analysis of current status and determination of target status
- Definition of need for action and implementation possibilities
- Implementation of measures and training courses
- Control and closure
Dr. Fabian Schmid
Tel. 044 444 37 97
Tel. 044 444 59 23