The structure and the content of the AMLO-FINMA remain as they were before. Nonetheless, the implications of the current changes are material for the financial intermediaries concerned, for instance:
Cash transactions: For cash transactions of CHF 15,000 or more, the contracting party and beneficial owner has to be identified and established if the bank has no business relationship with this party. The financial intermediaries need to train their employees accordingly and adapt the respective processes and controls (e.g. forms, transaction monitoring, compliance controls).
Branches and group companies abroad: Although branches and group companies abroad should already be comprehensively monitored as part of the consolidated supervision regime, the implementation varies significantly between institutions. The AMLO-FINMA now sets the pace:
- A periodic consolidated risk analysis need to be prepared. Accordingly, a group-wide and standardised risk process need to be established.
- A standardised reporting with quantitative and qualitative information needs to be in place. Furthermore, branches and group companies abroad will have to actively inform the parent company about critical business relationships and/or transactions. The implementation of this becomes difficult in countries that have a banking secrecy rule in place; here, an adequate solution will be required (e.g. client waiver).
- The group’s compliance function will have to perform regular controls on-site at the branches/group companies. This will significantly increase the coordination efforts and required resources at group level.
- In addition, the group has to make sure that it has uniform standards for combating money laundering in place throughout the group and that these are implemented, taking into account local rules.
Domiciliary companies: A financial intermediary should already today investigate, understand and document the reason and purpose of a domiciliary company. The new AMLO-FINMA will explicitly require institutions to clarify and document the reasons for using a domiciliary company. Criteria that warrant a closer look in regard to higher risks are in particular complex structures (e.g. the use of several domiciliary companies or domiciliary companies with fiduciary shareholders), non-transparent jurisdictions, no verifiable reason/purpose or short-term asset placement. Anyway, financial institutions should already deliberate today whether they should enter into or continue business relationships with domiciliary companies lacking a verifiable reason/purpose.
Payment orders: The responsibility for the completeness of the information in payment orders will be with the financial intermediary. The institutions and securities dealers concerned will have to review and adjust not only their payment systems and parameters but also their policies and internal processes. Last but far from least, this will also apply to the tools used to detect and possibly block payments from and to sanctioned countries.
High-risk business relationships and transactions: Internal risk assessments of the financial intermediary will no longer be sufficient for the identification of business relationships and transactions with increased risks. The AMLO-FINMA will require that the countries regarded by the FATF as “high-risk” or non-cooperative are also taken into account. This means that a regular mechanism is necessary to include any changes related to FATF risk countries and to incorporate them into the institution’s daily processes and controls.
Right to report and obligation to report: Art. 25a AMLO-FINMA will require that only the highest management body and/or persons who hold controlling functions (i.e. non-revenue generating functions) will be able to decide whether a suspicious activity report according to Art. 9 AMLA (reporting duty) or Art. 305ter para. 2 SCC (right to report) has to be filled. This should avoid conflicts of interest when deciding to report or not to report.