Switzerland Revisits Anti-Money Laundering Laws Amid US Criticism: Proposed Changes and Potential Challenges

Switzerland is considering new anti-money laundering rules in response to criticism from the US. U.S. State Department officials are pushing for tougher rules, especially those pertaining to lawyers. The proposed legislation is aimed at disclosing more information from companies and lawyers.

Switzerland has proposed new rules to tighten laws against money laundering, including the creation of a federal registry where companies and other legal entities would have to enter the names of their beneficial owners. That would make it harder for criminals and others to hide assets from police and tax authorities. However, the register will not be publicly available.

The proposals come amid increasing criticism from the US pointing to the lack of effectiveness of Switzerland’s sanctions.

In recent years, Switzerland has been forced to move away from traditions that ensured banking secrecy and made it attractive to wealthy individuals from around the world. Critics say not enough has been done and have expressed frustration over uneven enforcement of sanctions following Russia’s invasion of Ukraine. Switzerland is also reluctant to join a multilateral working group designed to improve cooperation on the confiscation of sanctioned Russian assets.

According to the Swiss government, “increased transparency should allow law enforcement agencies to more quickly identify the real owners of legal structures.”

However, a U.S. State Department spokesman said in an interview with Bloomberg this week that Switzerland needs to do more. The goal is to deny Russian President Vladimir Putin the ability to move money for oligarchs and other proxies, according to the official.

The main features of the proposed legislation:

• The introduction of a federal registry into which companies and other entities would be required to enter the names of their beneficiaries. The private registry would be managed by the federal police and regularly audited by the federal finance department;
• Anti-money laundering rules will apply to counselling services, especially legal advice;
• Measures to prevent breaches or circumvention of sanctions under the prohibition legislation;
• the cash payment threshold for precious metals trading would be lowered from 100,000 Swiss francs ($114,000) to 15,000 francs.

However, the proposals could be watered down during the long political negotiations ahead. Many Swiss lawmakers have been reluctant in the past to impose stricter limits on attorney-client privilege because they are lawyers themselves, a U.S. official said.

A genuine beneficial ownership registry would force lawyers to be more forthright in reporting suspicious activity,” the official said.

The group Transparency International said the draft law is welcome but needs improvement. Access to the registry should not be restricted but should be open to journalists and NGOs. Companies should also have access to verify their business partners,” it said in a statement. The group added that the draft law should be extended to transactions involving trade in art or luxury goods.