The Financial Action Task Force (FATF) removed Switzerland from the enhanced money-laundering compliance regime. After reviewing the latest implementation, FATF re-rated the countries in the strict AML-compliant and partially compliant.
In 2016, FATF added Switzerland to the list of those countries that need to enhance AML measures to combat money laundering and terrorist financing. According to the international regulatory authority, the country lacked compliance with the 9 FATF recommendations from 40. The most essential two recommendations from these are the 10 sanction the customer identity verification during the due diligence process and 40, the collaboration between international authorities in combating terrorist financing and money laundering. FATF advised the Swiss government that it needed to take urgent steps to implement these recommendations in order to comply with the international regulatory authority. They, then, also warned that the failure to do so could result in the country facing severe economic sanctions. Therefore, the government must take stringent measures to ensure that these recommendations are enforced.
The organisation stated that the country’s regulatory authority had taken many positive steps to comply with the recommendation’s primary customer due diligence (CDD). According to the FATF, they also implemented the revised laws forced at the beginning of 2023. Now, most of the Swiss financial intermediaries uphold the international AML derivatives, due-diligence, and Ultimate Beneficial Owners (UBOs) verification. As of right now, Switzerland is rated somewhat compliant with three suggestions, specifically compliant with the 29th and 8th recommendations. The Swiss Federal Council commented, “The recognition of Switzerland’s progress by the FATF, the leading intergovernmental body in this area, is an important achievement for the country.” However, more actions will be required to meet the requirements of the FATF’s upcoming examination, particularly with regard to the transparency of legal entities and the provision of legal guidance about the organisation of trusts and corporations.
Moreover, the laws from the global regulatory authority FATF constantly update with time. Currently, they have evolved the laws for identity verification to enhance the legal transparency of the customer, which was promoted in the Swiss Federal Council to register beneficial owners’ information and due-diligence requirements for high-risk activities. Switzerland’s AML regime will be thoroughly reevaluated for the second time during the country’s scheduled FATF mutual review in 2027 or 2028.
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