Body
The know your customer or know your client (KYC) guidelines and regulations for financial services require that professionals try to verify the identity, suitability, and risks involved with maintaining a business relationship.
Legal affairs
National regulatory framework regarding AML and effective date of the regulations
Switzerland actively fights cross-border financial crime and aligns itself with international standards such as of the Financial Action Task Force (“FATF”). The regulatory framework regarding AML in Switzerland was initiated by the Agreement on the Swiss banks’ code of conduct (“CDB 20”). It was issued by the Swiss Bankers Association (“SBA”) as a self-regulatory agreement in 1977. Today, Switzerland regulates anti money laundering based on two pillars: (i) anti money laundering is punishable according to art. 305bis of the Swiss Criminal Code (in force since 1 August 1990) and (ii) Switzerland's lawmaker have enacted the AMLA; effective since 1 April 1998). The latter requires financial intermediaries to comply with due diligence and disclosure requirements in respect of client transactions. The AMLA is supplemented by the Anti-Money Laundering Ordinance (“AMLO”), effective since 1 January 2016 and the Anti-Money Laundering Ordinance of FINMA (“AMLO-FINMA”), effective since 1 January 2016 as well.
National regulator or relevant authority for AML controls
The Money Laundering Reporting Office in Switzerland at Federal Office of Police (“MROS”) is Switzerland’s central money laundering office and functions as a relay and filtration point between financial intermediaries and law enforcement agencies. It registers reports of suspicious activity by financial intermediaries in regard to money laundering or terrorist financing and, if appropriate, forwards them to the prosecution authorities. The FINMA and the Federal Gaming Board (“FGB”) monitor compliance with due diligence obligations by the financial intermediaries under their supervision.
Within the scope of its prudential supervision responsibilities, FINMA monitors compliance with the regulations on combating money laundering by financial service providers such as banks, securities firms, insurers, and institutions under the Collective Investment Schemes Act. Insurers may alternatively choose to join the self-regulatory organisation of the Swiss Insurance Association (“SRO-SIA”) which monitors insurers' compliance with AMLA. Supervisory organisations (“SO”) authorised by FINMA monitor compliance with anti-money laundering legislation by independent portfolio managers and trustees. They also involve FINMA when necessary.
Furthermore, individuals and companies in the para-banking sector – credit card companies, trustees, or payment service providers, for example – are also subject to anti-money laundering legislation. For the purposes of monitoring their compliance with due diligence and disclosure requirements as set out in the AMLA, these individuals and companies must be affiliated to a self-regulatory organisation authorised and supervised by FINMA.
Customer Due Diligence
Conduct of a typical KYC identification process
The conclusion of a contract for the initial business relationship is to be considered the commencement of business relations. This can also be done verbally or be implied, which, however, in view of the complex formalities (AMLA 3–5), all of which must be carefully documented (AMLA 7), is hardly likely to be the case today, as the financial intermediary must be able to prove that it has comm