Insights

At the end of May 2024, the Federal Council submitted the dispatch on the further development of the fight against money laundering to Parliament. The main objectives of the bill are the introduction of a transparency register for legal entities and the introduction of AML due diligence obligations for lawyers and advisors. The proposed legislation represents a significant adjustment to meet the increasing international requirements for combating money laundering and terrorist financing.

This article informs you about the recently published draft of the new FINMA circular on the duties of conduct under the FinSA (Financial Services Act). On the one hand, this circular represents an important step towards further clarifying the existing regulations and facilitating their practical implementation; on the other hand, its implementation will lead to a need for adaptation on the part of most financial service providers. The Swiss Financial Market Supervisory Authority (FINMA) is ultimately aiming to increase legal certainty for financial service providers and improve investor protection.

There are currently interesting developments in Anti-money laundering legislation in the European Union (EU). The crypto sector and dealers of luxury goods such as cars, works of art, yachts, jewellery, etc. will be affected heavily by the future regulations. Professional football clubs and agents are also expected to be affected. In addition, an EU-wide upper limit for cash payments of a maximum of EUR 10,000 and a new EU authority to combat money laundering are to be created. This article outlines the most important changes at EU level, which could also have an impact on Swiss Anti-money laundering legislation in the medium term.

What asset managers of collective assets need to know about the new regulations.

Various amendments to the Collective Investment Schemes Ordinance (CISO) came into force on 1 March 2024. Most of the changes relate to the introduction of the new L-QIF, which we have already reported on separately. However, other significant amendments to the CISO have also been made. These also apply to existing institutions that do not manage L-QIFs and affect various aspects such as the management of liquidity risks.

The legal basis for the Limited Qualified Investor Fund (L-QIF) came into force on 1 March 2024 with the amendments to the Collective Investment Schemes Act (CISA) and the Collective Investment Schemes Ordinance (CISO). Based on the Luxembourg RAIF, this is intended to introduce a more flexible fund in Switzerland, as it already exists in various forms in EU countries. The aim is to strengthen the Swiss fund centre and make it more competitive.

The Federal Council is proposing various measures on how the Anti-Money Laundering Act (AMLA) should be amended in future. It will submit the dispatch with detailed explanations to Parliament in 2024. This article provides you with an overview of the new draft legislation.

On 21 December 2023, Switzerland and the United Kingdom signed the Berne Financial Services Agreement on mutual recognition in the area of financial services. The agreement is based on the mutual recognition of the equivalence of the respective legal and supervisory frameworks in selected areas of the financial sector. The aim of the agreement is to strengthen competitiveness and promote cooperation between the two major international financial centres and to enable and facilitate cross-border market access.

Since the end of the transition period on 1 January 2024, member institutions of the Swiss Bankers Association (SBA) have had to take into account the "Guidelines for financial service providers on the integration of ESG-preferences and ESG-risks into investment advice and portfolio management" in their new client business - for existing clients, the transition period runs until 1 January 2025. Below, we inform you about the main changes and outline the possible need for action for other financial service providers such as asset managers.

Artificial intelligence (AI) has been on the regulatory radar screen in Switzerland at least since the Federal Council's announcement in November 2023. At the same time, FINMA has formulated initial regulatory expectations for financial service providers when dealing with AI. The AI regulatory process in the European Union (EU) is even further advanced. The final version of its AI regulation ("AI Act") is expected in the first quarter of 2024. These developments also require Swiss financial service providers who wish to use AI systems to familiarise themselves with the planned regulation.

FINMA Circular 2023/1 “Operational risks and resilience – banks” comes into force on 1 January 2024. When the revised FINMA Circular comes into force, significant adjustments will be made in the areas of information and communication technology (ICT) risk management and critical data risk management. New requirements for ensuring operational resilience must also be observed. What are the most important aspects of the circular and what significance does it have for FinIA institutions?

Die FINMA führte im Frühling 2023 eine Erhebung zur Geldwäscherei-Risikoanalyse bei über 30 Banken durch und stellte erhebliche Defizite fest. Sämtliche Geldwäschereirisiken, denen ein Finanzintermediär ausgesetzt ist, müssen identifiziert, erfasst, analysiert und bemessen werden. Dies beinhaltet auch das Festlegen einer Risikotoleranz mit Schwellenwerten. Damit wurde ein komplettes Geldwäscherei-Risikomanagement erwartet, was die FINMA in ihrer Aufsichtsmitteilung 05/2023 vom 24. August 2023 schliesslich publizierte.

What financial service providers have to consider in regulatory change management from the auditor's point of view.

FINMA conducted a survey on money laundering risk analysis at more than 30 banks in spring 2023 and identified significant deficits. All money laundering risks to which a financial intermediary is exposed must be identified, recorded, analysed and measured. This also includes setting a risk tolerance with threshold values. Thus, a complete money laundering risk management was expected, which FINMA finally published in its Guidance 05/2023 of 24 August 2023.

The Ordinance on Asset Management within the Framework of a Guardianship or Conservatorship (VBVV) governs the investment and safekeeping of the assets of persons with protective measures. The completely revised VBVV adopted by the Federal Council on 23 August 2023 will enter into force on 1 January 2024.

Recently, especially since the Russia-Ukraine conflict, they have increasingly been in the focus of the general public: national and international sanctions. They are relevant and challenging for a large number of Swiss companies, especially for the financial sector. If sanctions are violated, there is a risk of reputational damage as well as criminal and regulatory consequences.