Switzerland has drafted new rules to ramp up its fight against money laundering. Specifically, it is holding lawyers and consultants accountable for reporting risks. And it is stepping up oversight of legal entities, such as trusts.
Switzerland has endured a historic reputation as being a popular destination for criminals.
Swiss to create central registry
In an attempt to fight money-laundering via shell companies, the Swiss government outlined plans to create a central registry. This would track who actually owns legal entities, detailing company owners while giving the finance ministry power to impose sanctions.
Henry Balani, Global Head of Industry & Regulatory Affairs for Encompass Corporation, said: “The continuing global attention on financial crime and sanctions has forced regulators to up their game with regards to money laundering regulation, with Switzerland the latest example to level up its economic crime agenda.
“We’ve seen in the UK, for example, the introduction of the Economic Crime Bill as a direct result of public pressure against Russian Oligarchs, sparking a closer inquiry into ownership structures and it’s important that this approach spreads through to European countries to bolster the response to economic crime, with regulation a key component.
“As part of the fight against financial crime, organisations themselves should embrace technology for robust Know Your Customer (KYC) processes, which ensure compliance and detect financial criminals faster.
“Utilising dynamic KYC process automation, for example, is crucial to navigating complex ownership structures to identify beneficial owners, enabling businesses and regulators to take collaborative action to truly tackle financial crime.”
Welcome, long overdue news
Chrisol Correia, Chief Strategy Officer at Facctum added: “Switzerland’s announcement that it will clampdown on money laundering activity is welcome news. But a move that is certainly long overdue. While these new measures are a step forward, their success will rely on whether regulations are, enforced consistently, and if penalties are sufficiently severe to be deterrents to breaking the law.
“The nation’s approach to AML has been criticised in the past as being too lax and the country has recently come under increased pressure to enforce tighter controls in the context of international measures to implement financial sanctions on Russia’s economic interest.
“If these measures are to be effective, Switzerland’s regulators will need to put into action a firm stance on financial crime and make sure that financial institutions are acting with urgency to implement a new culture that supports a new approach to financial crime countermeasures. This includes, for example, introducing tougher requirements on customer due diligence and more transparency in the declaration of beneficial ownership.
“Following this announcement, we expect Switzerland’s international partners will be watching to see if the new measures come with real teeth, notably additional supervisory capacity and improved enforcement capability. Many will be looking for early signs of an intent to pursue money launders and their assets with new urgency and aggression.”