Two important changes come into force

The new requirements affect Know Your Customer (KYC) processes, the checks businesses carry out to understand who they are dealing with and assess potential risks. They are based on two pieces of legislation: 

• The revised Swiss Anti-Money Laundering Act (AMLA)
• The new Federal Act on the Transparency of Legal Entities and the Identification of Beneficial Owners (LETA)

Together, they aim to make ownership structures more transparent and extend anti-money laundering obligations to certain activities that were not previously covered to the same extent.

For businesses, one key change is the introduction of new due diligence obligations for certain professional advisers.

More advisory activities fall under anti-money laundering rules

From 1 October, certain professional advisory activities will fall within the scope of the AMLA when they meet the legal requirements. This can affect lawyers, fiduciaries, accountants, real estate professionals, corporate service providers and other advisers, depending on the services they provide.

The new rules cover professional involvement in certain transactions. What matters is the activity being carried out, rather than simply the profession or sector. These activities include, among others:

• Advising on or assisting with the purchase or sale of real estate
• Setting up, managing or administering non-operating legal entities in Switzerland, and setting up legal entities abroad
• Providing an address or premises as a registered office for legal entities

These activities are considered to be carried out on a professional basis if certain thresholds are exceeded:

• More than CHF 50,000 in annual gross revenue
• More than 20 clients or transactions per year
• Third-party assets exceeding CHF 5 million
• Relevant financial transactions exceeding CHF 2 million per year

What does this mean for KYC?

For advisers that fall within the scope of the revised AMLA, identifying the client is only the beginning.

They must establish the identity of the beneficial owner, understand the purpose and nature of the transaction or business relationship and carry out additional checks where there is an increased risk.

These checks also need to be properly documented and kept traceable.

Beneficial ownership becomes more transparent

The new Transparency Act introduces additional obligations for legal entities themselves.

Most Swiss companies covered by the legislation will need to identify and verify their beneficial owners.

A beneficial owner is a natural person. As a general rule, this includes anyone who directly or indirectly controls at least 25% of a company’s capital or voting rights. Control may also exist in other ways, for example through contractual arrangements.

Companies subject to the legislation are responsible for keeping this information accurate and up to date. The register itself is not public and is intended for authorised authorities and other entitled parties.

KYC becomes an ongoing process

The new framework also makes clear that KYC does not end with onboarding. Ownership structures, beneficial owners and the risks associated with a business relationship can change over time. Businesses therefore need processes to keep relevant client and ownership information up to date and properly documented.

For companies affected by the new rules, now is the time to review how client information is collected, how beneficial owners are identified, how risks are assessed and where the supporting documentation is stored.

Making compliance simpler with DeepKYC

More checks do not necessarily have to mean more complicated processes.

DeepKYC is being developed to bring key KYC steps into one digital workflow, from client onboarding and digital identification to beneficial ownership checks, risk assessment and ongoing reviews.

Through its integration with Abacus ERP and DeepCloud services, DeepKYC aims to make the information required for compliance easier to collect, verify and manage within existing business processes.

Because as KYC requirements evolve, compliance should become more reliable, not more complicated.

Do you want to know how DeepKYC works? Visit the website or contact our team at  sales@deepcloud.swiss to request a demo or trial access.

Note: The legal and regulatory obligations that apply to a company depend on its activities and specific circumstances. This article does not constitute legal advice.