Switzerland – Know Your Customer (KYC) Rules

 

 

 

Switzerland is a major international financial center. Reporting indicates that criminals attempt to launder illegal proceeds in Switzerland from a wide range of criminal activities conducted worldwide. These illegal activities include, but are not limited to, financial crimes, narcotics trafficking, arms trafficking, organized crime, terrorist financing and corruption.

Although both Swiss and foreign individuals or entities launder money in Switzerland, foreign narcotics trafficking organizations, often based in Russia, the Balkans, Eastern Europe, South America and West Africa, dominate the narcotics-related money laundering operations in Switzerland.

 

KNOW-YOUR-CUSTOMER (KYC) RULES:

 

Enhanced due diligence procedures for PEPs:

PEP is an abbreviation for Politically Exposed Person, a term that describes a person who has been entrusted with a prominent public function, or an individual who is closely related to such a person. The terms PEP, Politically Exposed Person and Senior Foreign Political Figure are often used interchangeably

    • Foreign PEP: YES
    • Domestic PEP: YES

Switzerland – KYC covered entities

The following is a list of Know Your Customer entities covered by Swiss Law:

    • Banks
    • Securities and insurance brokers
    • Money exchangers or remitters
    • Financial management firms
    • Investment companies
    • Insurance companies
    • Casinos
    • Individuals acting as intermediaries in bank lending, money transactions, or trading of currencies, or providing wealth management and investment advice services

Switzerland – Suspicious Transaction Reporting (STR) Requirements:

Number of STRs received and time frame: 1,159 in 2010

The following is a list of STR covered entities covered by Swiss Law:

    • Banks
    • Securities and insurance brokers
    • Money exchangers or remitters
    • Financial management firms
    • Casinos
    • Individuals acting as intermediaries in bank lending, money transactions, or trading of currencies, or providing wealth management and investment advice services

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

 

Prosecutions: 360 in 2010 (Latest figures)
Convictions: 219 in 2009 (Latest figures)

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Because there are no laws for declaration of currency and monetary instruments, Swiss authorities cannot effectively conduct bulk cash investigations.

The number of suspicious activity reports increased by 29% from 2009 to 2010, to 1,159 reports encompassing a total of CHF 850 million (approximately $962 million), compared to CHF 2.2 billion (approximately $2.3 billion) in 2009. In 2010, 13 reports were related to terrorism finance, amounting to CHF 23 million (approximately $26 million).

The country‘s central geographic location, relative political, social, and monetary stability, the range and sophistication of financial services it provides, and its long tradition of bank secrecy not only contribute to Switzerland‘s success as a major international financial center, but also continue to expose Switzerland to potential money laundering abuse.

This potential is exacerbated by the current lack of adequate regulation of some potential means of facilitating money laundering, such as real estate, jewelry, luxury cars, works of art, and commodities like oil and gas.