The Swiss Government has drafted new anti-money laundering regulations that will establish stricter standards than those currently in place across Europe.
The proposed rules will require heightened accountability from lawyers, consultants, and banks regarding their reporting, scrutiny, and risk management practices. Additionally, there will be increased oversight on legal entities such as trusts. These regulations are expected to be presented to parliament in 2024 after a consultation process.
Historically, Switzerland has been perceived as a safe haven for illicit financial activities, but the country is making efforts to change this image. It currently exchanges bank account information with over 100 countries, yet it continues to face international pressure to enhance transparency regarding corporate ownership and the identities of actual beneficiaries.
If the new regulations are approved, professionals such as lawyers, accountants, and consultants who facilitate the formation of trusts and holding companies, or engage in real estate transactions, will be mandated to adhere to due diligence requirements and reporting obligations. There will also be stricter controls on assessing potential risks associated with clients, especially in light of international interests following Russia’s invasion of Ukraine.
A central registry has been proposed to track the legal ownership of entities, which would be maintained by the Federal Department of Justice and Police. This registry would provide information on the beneficial owners of companies and other legal entities, with oversight from a body within the finance ministry responsible for conducting checks and enforcing sanctions as needed.
Under the new rules, all forthcoming real estate transactions would undergo due diligence scrutiny, and cash transactions for precious metals and gemstones exceeding 15,000 Swiss francs (approximately $17,055) would be subject to anti-money laundering checks, reduced from the current limit of 100,000 francs.
Dr. Henry Balani, the global head of industry and regulatory affairs at Encompass Corporation, remarked that the growing focus on financial crime has prompted regulators to enhance their anti-money laundering efforts, with Switzerland being the latest to elevate its approach to economic crime. He noted similar trends in the UK with the introduction of the Economic Crime Bill aimed at scrutinizing ownership structures in response to public pressure concerning Russian oligarchs.
Chrisol Correia, chief strategy officer at Facctum, welcomed Switzerland’s commitment to curbing money laundering but emphasized that action had been long overdue. He stressed that the effectiveness of these new measures will depend on consistent enforcement and the severity of penalties to deter legal violations. Previously criticized for its lenient approach to anti-money laundering, Switzerland faces increased demands to implement tighter regulations, particularly in line with international sanctions against Russian economic interests.
Correia added that for these measures to succeed, Swiss regulators need to adopt a robust stance against financial crime, ensuring that financial institutions act promptly to foster a culture that aligns with a new strategy for combating such activities. This includes implementing more stringent customer due diligence and enhancing transparency in reporting beneficial ownership.
Following this announcement, there will be close scrutiny from Switzerland’s international partners to assess whether the new regulations will be enforced effectively, particularly regarding enhanced supervisory capabilities and a commitment to pursuing money launderers and their assets aggressively.