On February 27, 2024, a landmark agreement was signed between Switzerland and Panama, marking a significant step forward in the fight against financial crimes, including money laundering, terrorism financing, and corruption.
According to Moody’s Analytics, this bilateral cooperation, as reported by Swissinfo.ch, paves the way for the electronic transmission of mutual assistance requests, a first of its kind. This collaboration aims to enhance the reciprocal legal support between the two nations in combating crimes that span their borders.
Switzerland has been at the forefront of revising its Anti-Money Laundering (AML) framework, integrating it with several international treaties and regulatory updates to strengthen its stance against money laundering and associated offences. The Anti-Money Laundering Act (AMLA) of 1997, updated in 2016, alongside the Anti-Money Laundering Ordinance (AMLO), forms the crux of the Swiss AML laws. These pieces of legislation delineate the obligations of financial intermediaries in detecting and reporting potential money laundering or terrorism financing activities. The implementation of AMLA and AMLO represents a cohesive approach, merging statutory directives with practical execution guidelines.
Over recent years, Switzerland has methodically upgraded its AML regulations through various international agreements, legal amendments, and the proactive involvement of different agencies. This is partly to address the country’s perceived vulnerability to money laundering, stemming from its historical emphasis on the financial sector’s self-regulation. Notably, between January 1, 2018, and August 18, 2023, Moody’s issued 1,451 money laundering risk alerts for Switzerland, a figure surpassing those for neighboring countries such as Germany, France, and Austria.
Key developments in Swiss AML regulations include the Swiss Bankers Association’s revised code of conduct (CDB 20) in 2020, amendments to the Money Laundering Act by the Swiss Parliament in March 2021, and the Swiss Financial Market Supervisory Authority (FINMA) revising its Money Laundering Ordinance in October 2022. These changes aim at tightening due diligence, customer data verification, and transparency requirements, among others.
Switzerland’s progress in addressing deficiencies identified in the Financial Action Task Force’s (FATF) Mutual Evaluation Report (MER) led to improved ratings for customer due diligence and international cooperation in October 2023. Despite this progress, challenges remain, particularly in enhancing due diligence among non-financial businesses and professions and in enforcing effective sanctions for AML/CFT non-compliance.
Looking forward, Switzerland is committed to regular monitoring and reporting to FATF on its advancements in AML/CFT measures. With a proposal on the table to ban Hamas and related organizations, Switzerland aims to strengthen its terrorism financing prevention measures. The country is also considering more stringent enforcement actions and regulatory oversight, as evidenced by the substantial fine levied against Pictet by the US Department of Justice in December 2023 for facilitating tax evasion.
Furthermore, the anticipated Federal Act on the Transparency of Legal Entities (TLEA) is set to introduce a transparency register for beneficial owners, affecting an estimated 500,000 legal entities within Switzerland. This act mandates entities to ascertain and document their beneficial owners’ details and ensure this information is kept current and accessible within Switzerland. This initiative is part of Switzerland’s broader strategy to address shell company abuses and improve financial transparency and accountability.
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