Insights

Sanctions and embargoes pose major challenges for financial institutions. National and international regulations require complex review processes, while violations harbour legal, financial and reputational risks.

The number of successful cyber attacks has been increasing for years. Cyber attacks are therefore one of the main risks for FINMA-supervised institutions. The new FINMA Guidance 03/2024 now describes specific requirements for dealing with cyber risks and answers common questions about reporting obligations. Although it is aimed at larger and more highly regulated institutions such as banks, the principles are also applicable as a guidance to smaller and medium-sized portfolio managers (Art. 17 of the Financial Institutions Act [FinIA]). In particular, the boards of directors of the institutions must also be prepared.

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.

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.

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.

AML/KYC background checks on clients and prospects

A new bill is to be submitted for consultation this summer, which includes the introduction of a central register of beneficial owners of legal entities in Switzerland.