AML in Switzerland

Switzerland stands as a more serene, affluent, and stable modern market economy in comparison to its Western European counterparts. It boasts low unemployment rates, a highly skilled workforce, and a robust per capita gross domestic product (GDP). However, despite the robustness of the Swiss economy, money laundering has emerged as a burgeoning issue. Reports indicate that criminals are attempting to derive profits from an array of illicit activities within Switzerland, encompassing financial crimes, drug trafficking, arms trade, organized crime, and corruption.

Switzerland holds a significant position as an international financial hub, which unfortunately also attracts illicit financial endeavors. Historically, foreign drug trafficking syndicates, mainly originating from Russia, the Balkans, and Eastern Europe, have dominated the landscape of money laundering operations connected to narcotics trade in Switzerland. Although strides have been made in implementing Know Your Customer (KYC) protocols within the financial sector, there remains a need for enhanced monitoring of new entrants in the financial industry and entities susceptible to money laundering.

The Swiss government’s statement of intent from June 2017 underscores the necessity for expanding the Anti-Money Laundering (AML) measures across all relevant stakeholders and reinforcing the Swiss framework against criminal activities. This acknowledges the requirement for augmenting surveillance and strengthening the nation’s response to counteract such threats.

The Anti-Money Laundering Regulation delineates the prerequisites governing the professional conduct of financial intermediaries, encompassing due diligence responsibilities and the imperative of fulfilling reporting obligations for investors.

The government applies its rigorous mandates, as stipulated in the Anti-Money Laundering Act, not solely to financial intermediaries and traders, but also extends them to individuals offering specific services linked to the establishment, oversight, or management of corporations and foundations. In particular, the Federal Council proposes the addition of a new classification of individuals, referred to as consultants, who are legally obligated to express any suspicions concerning potential money laundering activities. Initially, the government was hesitant to entertain this obligation due to the industry’s inclination to uphold its professional commitments.

Switzerland adheres rigorously to regulations aimed at preventing money laundering and thwarting the financing of terrorism. The implementation of international standards set forth by the Financial Action Task Force (FATF), a specialized global entity situated within the OECD, is overseen by the Secretariat. As a result, Swiss legislation largely aligns with the international recommendations put forth by the FATF.

Switzerland assumed a pioneering role in adopting measures against money laundering, being among the first nations to do so. The foundation of Switzerland’s anti-money laundering framework dates back to 1977 when the Due Diligence Agreement (CDB) was established. Since then, these mechanisms have undergone expansion, with Swiss banks embracing due diligence practices in line with the CDB. Switzerland has stood as a trailblazer in identifying contractual parties and stakeholders through the Code of Conduct Agreement. The CDB remains a cornerstone in the comprehensive battle against money laundering.