Swiss AML Framework: AMLA, GwG, and Due Diligence
The Swiss AML Architecture
Switzerland's Anti-Money Laundering Act (Geldwäschereigesetz, GwG — "AMLA") is the cornerstone of the country's financial crime prevention framework. Despite Switzerland's reputation for financial privacy, it has one of the most comprehensive AML regimes in the world — and enforcement by FINMA has become increasingly aggressive since the FATF mutual evaluation flagged weaknesses in 2016.
The AMLA creates a two-tier system:
Tier 1: Banks and Securities Dealers (Directly under FINMA)
Banks, fund managers, insurance companies, and FINMA-licensed financial intermediaries are directly supervised by FINMA. They must implement full AML programs including risk-based CDD, transaction monitoring, SAR filing, and regular compliance audits.
Tier 2: Other Financial Intermediaries (via SRO)
Payment service providers, currency exchangers, asset managers not under FINMA direct supervision, trust companies, and others must affiliate with a FINMA-approved Self-Regulatory Organisation (SRO). The SRO sets AML rules and conducts audits on its members. About 30 SROs are approved in Switzerland.
Who Is a "Financial Intermediary" Under AMLA?
This is the critical question for Swiss company owners. If your business falls within the AMLA definition of "financial intermediary," you have significant compliance obligations — even if you're not a bank. The AMLA definition is intentionally broad:
Clearly Subject to AMLA
Banks, insurance companies, fund managers, securities dealers, portfolio managers, commodity traders (if handling client assets), payment service providers, money transmitters, currency exchange operators, trust and corporate service providers, precious metal dealers (cash transactions over CHF 50,000).
Often Subject to AMLA (Assessment Needed)
Lawyers and notaries (when managing client funds, operating escrow, or providing corporate/trust services — but NOT for standard legal advice), fiduciaries (Treuhand), tax advisors managing client funds, real estate agents (above threshold transactions), art dealers (cash transactions above CHF 50K).
Generally NOT Subject to AMLA
Standard operating companies providing goods or services (even large ones), holding companies receiving dividends from subsidiaries, consulting companies billing for services, SaaS and technology companies, e-commerce businesses. These have no AMLA obligations other than standard commercial KYC at their bank.
Customer Due Diligence (CDD): Three Risk Tiers
For financial intermediaries subject to AMLA, customer due diligence is not one-size-fits-all. It follows a risk-based approach with three tiers:
| CDD Level | When Applied | Required Measures | Review Frequency |
|---|---|---|---|
| Simplified CDD | Low-risk clients: listed companies, Swiss/EU institutions, low transaction values | Basic identity verification, name + address confirmation | Annually |
| Standard CDD | Default for most clients — individual entrepreneurs, private companies | Full identity verification, UBO identification, source of funds inquiry, business purpose documentation | Annually or on trigger event |
| Enhanced CDD | High-risk clients: PEPs, cash-intensive businesses, complex structures, sanctioned jurisdictions | All standard CDD + senior management approval + ongoing enhanced monitoring + source of wealth verification | Semi-annually or continuously |
Politically Exposed Persons (PEPs) in Swiss AML
PEP status triggers automatically enhanced due diligence under AMLA. Swiss law defines PEPs as individuals who hold or have held prominent public functions (within the past 12 months) — this includes heads of state, government ministers, parliamentary members, senior judiciary, military commanders, and senior executives of state-owned enterprises, plus their immediate family members and close associates.
PEP Status: Common Surprises
- Former politicians remain PEPs for 12 months after leaving office (some banks maintain enhanced monitoring for 3-5 years)
- Family members of PEPs (spouse, children, parents) are also subject to enhanced monitoring
- Swiss cantonal councillors and local politicians may qualify as domestic PEPs
- Senior executives of partially state-owned companies (e.g., former executive of a national airline) qualify
- Being a PEP does NOT disqualify you from opening Swiss accounts — but requires more documentation and senior approval
Suspicious Activity Reports (SARs) and Freeze Obligations
Financial intermediaries subject to AMLA are required to file Suspicious Activity Reports with the Money Reporting Office Switzerland (MROS / Meldestelle für Geldwäscherei). MROS is part of the fedpol (Federal Office of Police). Filing a SAR triggers a 5-business-day mandatory asset freeze — the financial intermediary cannot execute transactions for the suspect client during this period.
The Tipping-Off Prohibition
Once an intermediary files a SAR or is ordered to freeze assets, they are strictly prohibited from informing the client that they have been reported or that an investigation is underway. Violating this "tipping-off" prohibition is itself a criminal offense under Swiss law (Art. 11 AMLA). This is why Swiss banks sometimes appear to inexplicably delay transactions or request "routine" documentation — it may be a compliance freeze in progress.
Pattern Recognition: Why Your Account May Suddenly Get Reviewed
A Swiss holding company receives CHF 800,000 in three transactions over 10 days from a company in a jurisdiction with elevated FATF risk ratings. No prior relationship. No prior transactions of this size. The bank's transaction monitoring system flags this as unusual pattern. Compliance requests documentation. If company cannot provide: legitimate invoices, contracts, clear business rationale → SAR filed automatically, 5-day freeze.
Best practice: For any unusual or large transaction, proactively notify your relationship manager in advance — explain what it is, why it's happening, and attach the relevant contract or invoice. A phone call before the transaction prevents 99% of compliance friction.
Key Takeaways — Lesson 1
- AMLA applies to "financial intermediaries" — most standard operating companies are NOT subject (but their banks are)
- Three CDD tiers: simplified, standard, enhanced — enhanced applies to PEPs and high-risk clients
- PEP status triggers enhanced monitoring; remains active for 12 months after leaving office
- SAR filing causes a 5-day mandatory freeze + tipping-off prohibition — proactive communication with your RM prevents most issues
- MROS is the central SAR authority in Switzerland — not directly accessible to individuals