Thursday, September 24, 2015
Switzerland Money Laundering Changes Include Tax Crimes
The Financial Action Task Force on Money Laundering (FATF) has implemented the risk-based approach in its review of the 40+9 FATF recommendations in 2012. It is calling for more transparency on beneficial ownership.
This means that identifying beneficial owners will become more complex in future. The requirements as regards “politically exposed persons” (PEPs) are being widened to include PEPs resident in Switzerland. In addition, tax crimes are for the first time included as "predicate offences" to money laundering.
After carrying out its consultations, in December 2013 the Swiss Federal Council adopted for submission to parliament the draft of the new Swiss Federal Act on the Implementation of the 2012 Revised Recommendations of the Financial Action Task Force (FATF). A partial revision of the Swiss Anti-Money Laundering Act concerning the Money Laundering Reporting Office (MROS) had already entered into effect on 1 November 2013.
In addition to enhanced information exchange, the revision also expanded the powers of the MROS to obtain information in the future from financial intermediaries. After lengthy discussions the Swiss Federal Parliament reached an agreement and approved the amended draft of the Federal Act with the final vote on 12 December 2014. The deadline for referendum expired on 2 April 2015.
The draft contains the following key changes:
Alternative to cash ban
| If in the future traders accept more than 100,000 francs in cash, they are also subject to anti-money laundering due diligence requirements (otherwise the transaction must be made through financial intermediaries). In official insolvency auctions a cash limit of 100,000 francs has likewise been introduced.
Tax fraud as a predicate offence for money laundering
| A key change is that tax evasion is now considered to be a predicate offence to money laundering.
Transparency in bearer shares
| In the future, anyone who acquires the bearer shares of a company whose shares are not listed on the stock exchange must report the purchase of the company and identify themselves. The company must also maintain a record of the owners.
One new mandatory requirement is that the beneficial owners must be determined (owners with more than a 25% stake) for operating legal entities.
| Now not only rulers abroad are considered to be PEPs, but also persons in Switzerland and from international organisations.
Discontinuance of automatic freezing of assets
| Assets will no longer be frozen when the FI reports to the MROS; instead, assets are to be frozen only when the MROS informs the FI that the notification was forwarded to the law enforcement agency. But if there is a suspicion of terrorism, the assets must be frozen immediately.
| The revision requires that religious foundations must now be registered in the Commercial Register.
Entry into force in two steps
On 1 July 2015:
Code of Obligations
Collective Investment Schemes Act
Federal Intermediated Securities Act
On 1 January 2016:
Amendments to the Swiss Civil Code regarding ecclesiastical and family foundations
Provisions on tax predicate offences
Amendments to the Debt Collection and Bankruptcy Act concerning the mode of payment
Anti-Money Laundering Act and Anti-Money Laundering Regulation SAAM
Consultation process documents
Consultation process response