The Federal Council intends to increase the transparency of legal entities with a new federal law and to extend due diligence and reporting obligations to other areas of risky activities.
The Federal Council has adopted a dispatch on the further development of the fight against money laundering. A federal register of beneficial owners and new due diligence and reporting obligations for high-risk activities are intended to strengthen the integrity and competitiveness of Switzerland as a financial and business centre.
As a follow-up to the article of 18 April 2023, the most important changes and measures are presented below.
Why are these measures necessary?
An effective system for combating financial crime is essential for the reputation and stability of an internationally important and safe financial centre. Money laundering and terrorist financing threaten the integrity of the financial system. The misuse of legal entities and trusts to conceal assets is a current challenge in the enforcement of international sanctions, particularly against Russia. As an important financial centre, Switzerland must respond to these risks and further develop its existing anti-money laundering system.
The key elements of the draft law are as follows
Federal Transparency Register:
A new federal law will establish a central register in which all legal entities will be required to register their beneficial owners. The register, which will be managed by the Federal Department of Justice and Police (FDJP), will enable law enforcement authorities to determine more quickly and reliably who is behind a legal entity. Registration will be facilitated by a simplified notification procedure that will also apply to associations, foundations and other types of companies such as one-person companies and limited liability companies.
Due diligence requirements for high-risk advisory activities:
New due diligence obligations will be introduced for certain advisory activities, particularly in the area of legal advice, which pose an increased risk of money laundering. This applies in particular to certain activities related to the establishment and structuring of legal entities and real estate transactions. These due diligence obligations will be monitored by self-regulatory organisations (SROs) rather than the regional bar associations.
Other measures:
Other measures include provisions to prevent the circumvention of sanctions under the Embargo Act and due diligence obligations for cash payments of CHF 15,000 or more in precious metals trading and for all amounts in real estate trading. As a result of the consultation process, a reform of the SRO sanctions system has been abandoned.
Next steps
The draft law will now be submitted to the Federal Assembly for consultation. The new provisions are not expected to enter into force until 2026 at the earliest. These measures are intended to ensure that Switzerland complies with international standards for combating money laundering and terrorist financing.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.