On 1 January 2016, the revised Anti-Money Laundering Act (‘AMLA’) will enter into force.
The impetus for this revision was the implementation of the Revised Financial Action Task Force Recommendations of 2012. The Financial Action Task Force (‘FATF’) is an inter-governmental organisation which was established by the G-7 Summit in Paris in 1989. Its goal is to “protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction”. It issues recommendations to pre-empt money laundering which should be implemented into national law by the member states. Switzerland is one of the 34 founding members of the FATF and has been actively involved in defining these standards.
On 13 December 2013, the Swiss Federal Council presented to the Swiss Parliament the Dispatch on the Implementation of the Revised FATF Recommendations of 2012 (‘Dispatch’), which proposed several amendments to the AMLA. These amendments stipulated that cash payments for the purchase of chattels and immovable property were legal only up to a maximum amount of 100,000 Swiss Francs (equivalent to GBP 67,360). Additional payments had to be made through regulated financial intermediaries. According to the Swiss Federal Council, this limitation resulted from the finding that “in today’s business life, large cash payments are unusual in purchase transactions and suspicious from a money laundering perspective” (see p. 629 of the Dispatch).
However, the proposed ban on cash payments over 100,000 Swiss Francs encountered great resistance from the Swiss Parliament. Following an extended period of discussions, the Swiss Parliament passed an attenuated version of these amendments. The scope of the AMLA was extended to include “private individuals and legal entities that trade in goods in a commercial capacity and accept cash payments (professional dealers)” (new art. 2 para. 1 lit. b AMLA). Professional dealers may still accept cash payments in excess of 100,000 Swiss Francs, but must adhere to similar requirements as regulated financial intermediaries:
- When establishing a business relationship, they must (a) verify the identity of the client, (b) establish the identity of the beneficial owner, and (c) maintain comprehensive records of the transactions and the client/beneficial owner (new art. 8a para. 1 AMLA).
- In addition, professional dealers are required to clarify the rationale of a transaction if it appears unusual and its legality is questionable or if there are grounds to suspect money laundering (new art. 8a para. 2 AMLA).
- Should the suspicion be confirmed, professional dealers must immediately file a report with the Swiss Money Laundering Reporting Office (new art. 9 para 1bis AMLA).
These requirements also apply to cash payments where individual instalments are below 100,000 Swiss Francs, but the total transaction value is above the threshold (new art. 8a para. 3 AMLA). Professional dealers can avoid these newly established requirements by transacting through a regulated financial intermediary (new art. 8a para. 4 AMLA). Professional dealers must also appoint a recognised audit company to audit their compliance with these diligence and reporting requirements (new art. 15 para. 1 AMLA).
The exact details of these requirements will be specified by the Swiss Federal Council in the Anti-Money Laundering Ordinance (‘AMLO’). At this point in time, there is a draft of the AMLO and the consultation period is on-going. As a result of the consultation period, it might still be further amended. The meeting of the Swiss Federal Council to pass the AMLO is scheduled for November 2015. It is envisaged that the AMLO will enter into force at the same time as the AMLA (1 January 2016).
In order to meet this tight deadline, art dealers need to act soon. The revision of the anti-money laundering laws will require substantial investments in compliance procedures, IT-systems and employee training.