Discover the key obligations of fiduciaries in Switzerland under the AML Act, KYC control requirements, PEP monitoring and risks related to sanctions, as well as the role of MROS in combating money laundering.

Scope and obligations of fiduciary professionals under the AML Act

The Anti-Money Laundering Act (AML) provides an essential legal framework to combat money laundering and terrorist financing in Switzerland. Fiduciaries, as financial intermediaries, are subject to strict obligations to ensure compliance with this law (source: Anti-Money Laundering Act (AML)).

Who is subject to the AML?

Fiduciary professionals are subject to the AML as soon as they carry out activities such as:

Wealth management.
Domiciliation services.
Creation and management of companies or trusts.
Financial transactions on behalf of third parties.

These activities place them in the category of financial intermediaries, subjecting them to specific obligations.

Main obligations of fiduciaries

Client identification: Verify the identity of clients and beneficial owners.
Transaction monitoring: Identify and report suspicious transactions.
Ongoing training: Ensure employees are trained in AML requirements.
Record keeping: Retain documents related to transactions and client identification for at least 10 years.
Cooperation with authorities: Work with the Money Laundering Reporting Office Switzerland (MROS).

The KYC process: client information and verification

The Know Your Customer (KYC) process is a fundamental pillar of AML compliance. It aims to identify clients and understand the nature of their activities.

KYC process steps

Information collection:

Name, surname, date of birth and nationality.
Address and contact details.
Official identification documents (passport or ID card).

Beneficial owner identification:

Verification of the individual or entity who actually benefits from the funds.

Business relationship analysis:

Understand the nature of the client's activities.
Identify sources of funds.

Information verification:

Compare data with external databases.
Check international sanctions lists.

Summary table of documents to collect

Client type	Required documents
Individual	Passport, proof of address, KYC declaration
Company	Articles of association, commercial register, beneficial owner identification
Trust or foundation	Deed of establishment, list of beneficiaries, KYC declaration

Monitoring specific risks: PEPs and economic sanctions

Who are PEPs?

Politically Exposed Persons (PEPs) are individuals who hold or have held important public functions, as well as their relatives. These persons present a higher risk of corruption and money laundering.

Specific obligations related to PEPs

Enhanced identification:

Thorough verification of provided information.
Analysis of family or professional links.

Ongoing monitoring:

Regular transaction checks.
Update KYC information.

Economic sanctions

Fiduciaries must also monitor international sanctions and ensure they do not deal with sanctioned entities or individuals. This includes:

Checking sanction lists published by Swiss and international authorities.
Implementing automated systems to detect suspicious transactions.

Reporting to MROS: procedure and obligations

The Money Laundering Reporting Office Switzerland (MROS) is the central authority in Switzerland for receiving and analyzing reports of suspicious activities.

When to make a report?

A report must be made in the following cases:

Suspicion of money laundering.
Unusual transactions without economic or lawful justification.
Links with a person or entity on a sanctions list.

Steps for reporting to MROS

Information collection:

Details of suspicious transactions.
Identity of involved parties.

Report drafting:

Describe the reasons for suspicion.
Attach supporting documents.

Submission to MROS:

Use the secure platform provided by MROS.

Checklist for a successful report

Verification of collected information.
Clear and precise report drafting.
Compliance with legal deadlines for reporting.
Retention of a copy of the report for records.

Case study: Analysis of a suspicious report

Context

A client deposits CHF 500,000 in cash into their fiduciary account. During the KYC analysis, they state the funds come from an inheritance but provide no supporting documents.

Analysis

Information collection:

The client is identified as a PEP.
The funds come from a high-risk country according to FINMA lists.

Document verification:

No proof of inheritance.
Inconsistencies in the client's statements.

Action:

Report to MROS with all available documents.
Temporary suspension of transactions related to these funds.

Steps to ensure AML compliance

Implement an internal policy:

Define clear procedures for KYC and transaction monitoring.

Train employees:

Organize regular training on AML and money laundering risks.

Use technological tools:

Adopt software to detect suspicious transactions.

Conduct internal audits:

Regularly check process compliance.

Cooperate with authorities:

Maintain open communication with MROS and FINMA.

Common mistakes and how to avoid them

Common errors

Incomplete client identification:

Failure to verify beneficial owners' identity.

Lack of training:

Employees not trained in AML requirements.

Failure to update data:

Not regularly updating KYC information.

How to fix them?

Implement checklists:

Use control lists for each step of the KYC process.

Schedule regular training:

Train staff on new regulations and best practices.

Automate processes:

Use tools to monitor transactions and update data.

FAQ

What is the AML?

The Anti-Money Laundering Act (AML) is Swiss legislation aimed at preventing money laundering and terrorist financing. It imposes obligations on financial intermediaries, including fiduciaries.

What are the risks of regulatory non-compliance?

Risks include fines, criminal sanctions, loss of reputation and revocation of the license to operate.

What documents must be collected for KYC?

Documents include official identification, proof of address, articles of association for companies and information on beneficial owners.

What to do in case of suspicion of money laundering?

Collect all relevant information, draft a detailed report and submit it to MROS within legal deadlines.

How to identify a PEP?

PEPs are persons who hold or have held important public functions. Their identification requires thorough analysis and the use of specialized databases.

What tools can help with AML compliance?

KYC management software, transaction monitoring tools and sanctions databases are essential to meet AML requirements.

Sanctions for non-compliance with AML

Failure to comply with the obligations imposed by the Anti-Money Laundering Act (AML) can lead to serious consequences for fiduciaries and other financial intermediaries. These sanctions ensure that financial sector actors comply with standards to prevent money laundering and terrorist financing.

Types of sanctions

Administrative sanctions:

Revocation of the license to operate.
Prohibition from operating in the financial sector.
Administrative fines of up to several million Swiss francs.

Criminal sanctions:

Prison sentences of up to five years for serious offenses.
Criminal fines in cases of negligence or complicity in money laundering activities.

Financial sanctions:

Seizure of funds linked to illicit activities.
Payment of damages to injured parties.

Reputational sanctions:

Loss of trust from clients and business partners.
Negative impact on the company's reputation, potentially leading to loss of market share.

How to avoid sanctions?

Comply with legal obligations: Ensure all AML requirements are met.
Regularly train employees: Implement ongoing training to raise awareness of risks and obligations.
Audit internal processes: Conduct regular checks to identify and correct potential weaknesses.
Cooperate with authorities: Maintain proactive communication with MROS and FINMA.

Technological tools for AML compliance

The use of technological tools is essential to ensure effective compliance and reduce risks related to money laundering.

Types of available tools

KYC management software:

Automate collection and verification of client data.
Integration with sanctions and PEP databases.

Transaction monitoring tools:

Real-time detection of suspicious transactions.
Analysis of unusual behaviors using artificial intelligence.

Document management systems:

Secure archiving of KYC documents and compliance reports.
Quick access to information in case of audit or authority request.

Sanctions databases:

Access to updated lists of sanctioned individuals and entities.
Integration with internal systems to automate checks.

Advantages of technological tools

Advantage	Description
Time saving	Automation of repetitive processes, such as KYC verification.
Reduction of human errors	Minimization of risks of errors in manual checks.
Real-time compliance	Automatic updating of databases and sanctions lists.
Detailed reports	Generation of reports compliant with authority requirements.

Best practices for effective compliance management

To ensure optimal AML compliance management, fiduciaries must adopt rigorous and proactive practices.

Establish a compliance culture

Committed leadership: Leaders must set an example by prioritizing compliance.
Internal communication: Regularly inform employees of regulatory updates.
Encourage transparency: Create an environment where employees feel comfortable reporting suspicious behavior.

Implement strong internal controls

Risk assessment: Identify and assess risks specific to the company.
Segmentation of responsibilities: Avoid conflicts of interest by separating critical functions.
Continuous monitoring: Use tools to monitor transactions and business relationships in real time.

Checklist for effective compliance management

Have you implemented a clear and documented compliance policy?
Do your employees receive regular AML training?
Do you have technological tools for KYC and transaction monitoring?
Do you conduct regular internal audits?
Do you have an action plan in case of suspicion of money laundering?

FAQ (continued)

What are the deadlines for submitting a report to MROS?

Reports must be submitted without delay as soon as suspicion of money laundering is identified. In general, this must be done within 24 hours of detecting suspicious activity.

Do fiduciaries have to report all cash transactions?

No, only cash transactions that exceed a certain threshold or appear suspicious must be reported. Fiduciaries must, however, document all cash transactions to ensure traceability.

What are the risks of incorrect identification of beneficial owners?

Incorrect or incomplete identification of beneficial owners can lead to sanctions for non-compliance, as well as an increased risk of inadvertently facilitating money laundering activities.

How can fiduciaries prepare for a FINMA audit?

To prepare for an audit, fiduciaries should:

Maintain complete and up-to-date KYC records.
Ensure all employees are trained in AML requirements.
Conduct regular internal audits to identify and correct weaknesses.

Are there exceptions to AML obligations?

Yes, certain activities or professions may be exempt from AML obligations, but this depends on specific circumstances and applicable regulations. It is advisable to consult FINMA guidelines for detailed information (source: Combating money laundering according to FINMA).

AML/LBA in fiduciary services: obligations, KYC, risks and compliance file in Switzerland