GwG – obligations of the financial intermediary

The obligations of the financial intermediary pursuant to GwG are divided between:

Due to the nature of the GwG as a framework act, these represent general provisions which are detailed further by flanking ordinances by the FINMA or the regulations of the self-regulating organisation (SRO) (cf. regulatory provisions set out in Art. 17 and 18 Para. 1 lit. e GwG), depending upon the particular financial intermediary or financial sector.

The FINMA has exercised its regulatory powers and with effect from 1 January 2011 brought together the existing ordinances on the prevention of money laundering and terrorism finance  in the Ordinance of the Swiss Financial Market Supervisory Authority concerning the Prevention of Money Laundering and Terrorism Finance (official title: “Verordnung der Eidgenössischen Finanzmarktaufsicht über die Verhinderung von Geldwäscherei und  Terrorismusfinanzierung” (in short: “GwV-FINMA”) of 8 December 2010.

Specifically, the following ordinances were set aside at the end of the year 2011:

  • Ordinance of the Swiss Financial Market Supervisory Authority concerning the Prevention of Money Laundering and Terrorism Finance in the Banking, Securities Trading and Collective Investment Field (Verordnung der Eidgenössischen Finanzmarktaufsicht über die Verhinderung von Geldwäscherei und Terrorismusfinanzierung im Banken-, Effektenhändler- und Kollektivanlagebereich – “GwV-FINMA 1”)
  • Ordinance of the Swiss Financial Market Supervisory Authority concerning the Prevention of Money Laundering and Terrorism Finance in the Private Insurance Field (Verordnung der Eidgenössischen Finanzmarktaufsicht über die Verhinderung von Geldwäscherei und Terrorismusfinanzierung im Privatversicherungsbereich – “GwV-FINMA 2”)
  • Ordinance of the Swiss Financial Market Supervisory Authority concerning the Prevention of Money Laundering and Terrorism Finance in the Remaining Sector (Verordnung der Eidgenössischen Finanzmarktaufsicht über die Verhinderung von Geldwäscherei und Terrorismusfinanzierung im übrigen Finanzsektor – “GwV-FINMA 3”)

As a consequence, the following regulations are now in force:

  • Ordinance of the Swiss Financial Market Supervisory Authority concerning the Prevention of Money Laundering and Terrorism Finance (Verordnung der Eidgenössischen Finanzmarktaufsicht über die Verhinderung von Geldwäscherei und  Terrorismusfinanzierung – in short: “GwV-FINMA”)
  • Ordinance of the Swiss Casino Supervisory Authority concerning the Due Diligence Obligations of Casinos to Combat Money Laundering (Verordnung der Eidgenössischen Spielbankenaufsicht über die Sorgfaltspflichten der Spielbanken zur Bekämpfung der Geldwäscherei – “GwV ESBK”)
  • Regulations of the respective self-regulating organisation (SRO) of which the financial intermediary is a member.

Principles – general proscriptions

On the basis of its regulatory remit set out in Art. 17 and 18 Para. 1 lit. e GwG, the Swiss Financial Market Supervisory Authority (“FINMA”) used its Money Laundering Ordinance (Geldwäschereiverordnung – “GwV-FINMA”) to detail the GwG due diligence obligations in the form of general principles within the meaning of proscriptions concerning:

  • assets, as well as
  • business relationships.

Prohibited assets

Pursuant to Art. 7 GwV-FINMA, financial intermediaries are prohibited from accepting assets which they know to be the proceeds of crime. In this conjunction it is irrelevant whether the corresponding crimes were committed abroad. If the assets are accepted negligently, then this threatens to place a question mark over whether the financial intermediary is able to guarantee the performance of proper business activities.

Prohibited business relationship

In addition, pursuant to Art. 8 GwV-FINMA, financial intermediaries are prohibited from engaging in business relationships:

  • with companies and persons which they know, or should know, finance terrorism or form a criminal organisation, belong to an organisation of this nature or provide this with support;
  • with banks which do not maintain a physical presence at the place of incorporation (fictitious banks), insofar as they are not part of a reasonably consolidated supervised financial group.