Name
Global FinTech Guide
Country _ Name
Switzerland
SectionTitle
KYC requirements
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
enced the business relationship in compliance with all corresponding formal due diligence obligations.

A plausibility check that includes generally accessible information should be required. The examining person must know what a real document from the issuing country looks like, even if documentation on foreign ID cards must be purchased for this purpose. If the financial intermediary does not want to incur such expenses, it may have to refrain from accepting identification documents from jurisdictions it does not know and thus the corresponding customers. The examining person must then be aware of the usual indications of counterfeiting, which can be determined with reasonable effort. Depending on the circumstances, this may include, for example, an examination of the ID card under UV light.

Identification by means of a digital certificate is not permitted. On the other hand, personal meetings are now permitted by means of identification via digital channels, i.e. by video and online identification (c. FINMA Circular 2016/7). In the interests of technological neutrality, other articles of AMLO-FINMA relating to formal criteria were also included in the digital context, e.g. AMLO-FINMA 16 (means of clarification in cases of increased risks) and AMLO-FINMA 28 (prerequisites for delegation).

Possibility to meet customer due diligence requirements by relying on third parties who are obliged by law themselves to comply with AML regulations

Yes, such is permissible pursuant to Art. 28 ALMO-FINMA and Art. 43 CDB 20. The delegation of the mandatory identification in the non-banking sector may take place without written agreement either to a body within a company or a group with an equivalent standard of due diligence or to another financial intermediary who is subject to equivalent supervision and regulation with regard to combating money laundering and the financing of terrorism and has taken measures to fulfil the due diligence obligations in an equivalent manner. Alternatively, another third party can be called in if it is carefully selected, instructed, and monitored and its obligations are laid down in a written agreement (AMLO-FINMA 28). Since the due diligence obligations are already fully effective with the commencement of the business relationship, it must be demanded that such a third party is not only trained in the formal area of identification, but also has sufficient knowledge of the business to be able to identify any indications of money laundering or the financing of terrorism that may arise during the identification process.

Possibility to outsource customer due diligence by contract to other third parties who are not obliged by law to meet AML regulations and rely on these (e.g., WebID, IDnow, PostIdent)

The CDB 20 specifies that a bank may, by way of a written agreement, mandate the verification of the identity of a controlling person as well as that of a beneficial owner if (i) it has instructed such mandatory as to its tasks, and (ii) it is able to monitor the proper execution of the verification of identity of the contracting partner as well as that of the controlling person and beneficial owner.
 
The mandatory must forward all identification files and any identification of the controlling person and beneficial owner to the bank and certify that any copies forwarded are identical to the corresponding originals.

Presence of a license or registration requirement for the third party in case of outsourcing customer due diligence

No registration required (see above).

Further questions

Entities that could be relied on specifically by law as a third party to comply with AML regulations (regardless of outsourcing)


Yes credit institutions
Yes financial institutions
No auditors, external accountants, and tax advisors
No notaries and other independent legal professionals
No other trust or company service providers
No estate agents
Yes other persons trading high-value goods
Yes providers of gambling services


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