Zurich, Switzerland - In a significant move to combat money laundering and terrorist financing, the Federal Council of Switzerland unveiled proposed legislation on August 30, 2023, designed to enhance the country's anti-money laundering (AML) efforts. This development comes as Switzerland seeks to safeguard its financial system and reputation on the global stage.
Key Highlights of the Proposed Legislation
- Enhanced Due Diligence for Legal Advisors: Under the proposed laws, attorneys and other advisory professionals will be required to conduct thorough due diligence. This measure is aimed at addressing elevated risks associated with consultancy activities, such as assisting in entity formation and real estate transactions. It will involve the identification and verification of clients and beneficial owners involved in transactions.
- Centralized Register of Beneficial Owners (BO): Switzerland plans to establish a centralized, non-public register of beneficial owners. This registry, managed by the Federal Department of Justice and Police, will help law enforcement agencies quickly and accurately identify the true owners of legal entities. This move aligns with global efforts to increase transparency in financial transactions.
- Sanctions and Real Estate Transactions: The proposed legislation also includes measures related to sanctions violations and real estate transactions. It addresses concerns surrounding the use of legal entities and trusts for illicit purposes. Switzerland aims to bridge gaps in non-financial sectors regarding AML safeguards.
- Precious Metal Traders: The proposed laws will introduce new due diligence obligations for precious metal traders, particularly for cash payments exceeding CHF 15,000 (approximately $16,900). This step aims to curb potential money laundering activities in the precious metals sector.
Motivation and Global Context
The Federal Council recognizes the grave threat that money laundering and terrorist financing pose to the integrity of the financial system. Switzerland, as a major financial center, acknowledges its vulnerability to these risks. Internationally, Switzerland has faced scrutiny for its role as a potential haven for tax evasion and money laundering. The absence of regulations regarding beneficial owners has heightened these concerns.
The proposed laws aim to bolster Switzerland's financial center's resilience against funds of criminal origin and to enhance its reputation as a business hub. While the Swiss financial sector has robust AML safeguards, the legislation acknowledges gaps in other non-financial areas and seeks to address them.
Next Steps and Timeline
The Federal Council has published the proposed laws in German, with an English FAQ and informative graphic. Stakeholders have the opportunity to provide input until November 29, 2023. The Council plans to take action on the legislation in 2024.
In conclusion, Switzerland's proposed anti-money laundering legislation signifies a proactive step towards strengthening its financial system and aligning with global efforts to combat financial crime. The focus on due diligence, centralized beneficial owner registers, and other measures demonstrates Switzerland's commitment to protecting its financial integrity in an ever-evolving global landscape.