Switzerland’s FINMA Finalizes Anti-Money Laundering Rules Ahead of 2027 Implementation

Key Takeaways

• January 2027 Implementation: FINMA's revised Anti-Money Laundering Ordinance and two updated industry self-regulatory frameworks take effect January 1, 2027, with the latter providing four-month transition periods.
• Correspondent Banking: Article 37, paragraph 5, of the revised ordinance applies only to clients with direct access to a correspondent bank's accounts.
• Ownership Transparency: Revised explanatory notes clarify requirements concerning ownership and control structures, including their relationship to complex structures and domiciliary companies.
• Sanctions Compliance: FINMA expanded its explanations of measures intended to prevent violations of restrictions imposed under Switzerland's Embargo Act.
• Advisory Services: Separate guidance clarifies supervisory responsibilities following the expansion of Switzerland's Anti-Money Laundering Act to certain advisory activities.

Deep Dive

Switzerland's financial regulator has narrowed the application of a provision governing correspondent banking relationships with foreign banks, one of several clarifications included in anti-money laundering rules finalized Tuesday ahead of their implementation next year.

The Swiss Financial Market Supervisory Authority (FINMA) published the partially revised Anti-Money Laundering Ordinance on November 10, together with updated industry standards and separate guidance concerning the supervision of certain advisory services.

The ordinance will take effect on January 1, 2027, alongside revised due diligence standards for Swiss banks and updated regulations of the Self-Regulatory Organisation of the Swiss Insurance (SRO-SVV). Both sets of industry self-regulation provide for a four-month transition period.

The revisions reflect recent amendments to Switzerland's Anti-Money Laundering Act and the Federal Council's Anti-Money Laundering Ordinance as the country prepares for a forthcoming mutual evaluation by the Financial Action Task Force (FATF). For financial institutions, the changes clarify how several anti-money laundering obligations should be interpreted, particularly those concerning correspondent banking, ownership structures, and measures to prevent sanctions violations.

FINMA consulted on the proposed revisions in May and incorporated some of the feedback into the final ordinance and its accompanying explanatory notes. Among the changes is a clarification to Article 37, paragraph 5, of the FINMA Anti-Money Laundering Ordinance, which concerns correspondent banking relationships with foreign banks. FINMA specified that the provision applies only to clients with direct access to the correspondent bank's accounts.

The regulator also revised its explanatory notes on transparency of ownership and control structures. The changes clarify how those provisions relate to existing requirements concerning complex structures and domiciliary companies, while providing additional explanation of the risk-based approach and associated documentation requirements.

FINMA received numerous comments seeking greater clarity on individual provisions during the consultation. Some of those concerns were addressed through changes to the explanatory notes rather than amendments to the ordinance itself.

Sanctions compliance was another area addressed in the final documentation. FINMA supplemented its explanations of new measures intended to prevent breaches of coercive measures imposed under Switzerland's Embargo Act.

The additional guidance concerns the analogous application of provisions governing the monitoring of business relationships and transactions, providing further detail on how those monitoring requirements apply to the preventive measures.

FINMA's Board of Directors also recognized two revised industry frameworks as minimum standards.

The first is the Swiss banks' code of conduct concerning the exercise of due diligence, which was revised for the same reasons as the FINMA ordinance. The second consists of updated regulations issued by the SRO-SVV. Both frameworks will enter into force on January 1, 2027, with four-month transition periods.

FINMA also addressed the implications of recent legislative changes that extend Switzerland's Anti-Money Laundering Act to certain advisory services. The expansion requires amendments to FINMA Circular 2011/1, which concerns activities qualifying as financial intermediation under the Anti-Money Laundering Act.

In a separate supervisory communication, FINMA clarified the scope of the circular and the responsibilities associated with supervising activities carried out in an advisory capacity.

The guidance accompanies the broader legislative changes but is distinct from the partial revision of the FINMA Anti-Money Laundering Ordinance. FINMA said the expanded scope of the legislation makes changes to the circular necessary.

The November announcement completes FINMA's consultation process for the ordinance revision and confirms the final text ahead of its January implementation.

The revised industry standards will have their own transition arrangements, while the separate guidance on advisory activities addresses supervisory responsibilities under the expanded legislation. FINMA has identified the need to amend Circular 2011/1, but its November 10 announcement does not establish a date for completing that amendment.

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