SWITZERLAND Law and Practice Contributed by: Judith Raijmakers and Florian Thomas Willi, Loyens & Loeff
5. AML/KYC 5.1 AML and CFT Requirements
document with a photograph (eg, passport or identity card) and put a copy of such document on record. If the business relationship is estab - lished by video and meets the requirements of the FINMA Circular 2016/7 “Video and online identification”, it is deemed equivalent to identi - fication face-to-face. If the business relationship is established by cor - respondence, the bank must verify the identity of the contracting partner via an authenticated copy of an identification document. Online iden - tification is deemed equivalent to identification by correspondence, if the process meets the requirements of the FINMA Circular 2016/7. Legal entities and partnerships Legal entities and partnerships are gener - ally identified via a Swiss or foreign-equivalent commercial registry extract or written extract of such database. The identity of the individuals that establish the business relationship must be checked and power of attorney relationships taken note of and documented. Establishment of Beneficial Owner Swiss banks must also establish the identity of the beneficial owner of legal entities and part - nerships. For operating legal entities, the bank needs to determine the individual who ultimately controls the legal entity (controlling party). Such determi - nation is made according to the following cas - cade: • When a business relationship is established, the first step is to check whether a natural person holds a voting or equity interest of 25% or more in the contracting party. • If this is not the case, the second step is to check whether a natural person exercises
Swiss banks qualify as financial intermediaries and therefore are in scope of the Swiss AML framework, including AMLA and its implement - ing ordinances. The AMLO-FINMA provides the more detailed requirements for financial institu - tions (including banks) to prevent money laun - dering (ML) and terrorist financing (TF), includ - ing customer due diligence, organisation rules, transaction monitoring, and reporting obliga - tions. In summary, banks need to: • identify the contracting party; • establish the identity of the beneficial owner; • repeat the identification per the first two bullet points above in the event of doubt; • apply special duties of due diligence in cer - tain circumstances; • comply with ongoing documentation and retention obligations; • comply with ongoing organisational meas - ures; and • comply with reporting (or further measures) in the event of a reasonable suspicion of ML or TF. Identification of Contracting Party For purposes of identification of the contract - ing party, the controlling party, and the benefi - cial owner, AMLO-FINMA refers to the CDB 20. Banks must establish the identity of the con - tracting party when establishing business rela - tionships. Natural persons If the business relationship is established in a face-to-face meeting, the bank must identify the contracting party via an official identification
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