In December 2003 the Swiss Money Laundering Control Authority (Control Authority) published a revised code of practice for investment companies. According to the new code of practice, all investment companies are considered to be financial intermediaries and thus subject to the provisions of the Swiss Money Laundering Act (MLA, in force since April 1 1998).
The Control Authority argues that the main purpose of investment companies is not the financing of other companies but capital investment. For the definition of investment companies the Control Authority now refers to the rules issued by the SWX Swiss Exchange, which define investment companies as "capital investment bodies organized according to company law, which have the purpose, either exclusively or mainly, of generating yields and/or capital gains and which do not pursue active entrepreneurial activities in the original sense of the term". This rule distinguishes between investment companies and holding companies, which are not subject to the Money Laundering Act.
As a consequence of the new code of practice, numerous investment companies, including about 40 investment companies now listed on the SWX Swiss Exchange, will have to comply with the obligations of financial intermediaries under the MLA. Thus, investment companies must identify shareholders and the beneficial owners of shares, draw up and retain detailed identification documentation and report cases of suspicious funds.
Further guidance and clarification by the Control Authority on how to fulfil the obligations is required, especially for public investment companies, whose shareholders may sell or purchase shares on a daily basis over the stock exchange.
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