On October 10 1997 the Swiss Parliament passed a new act aimed at combatting money-laundering in the financial sector. This latest legislative step expands on the due diligence requirements of articles 305 bis and ter of the Swiss Penal Code (SPC) and establishes a comprehensive (self-) regulatory framework for Finance Intermediaries. The latter include banks, fund managers, insurance entities and security dealers (article 2 paragraph 2 Intermediaries). It also includes anyone who by profession accepts possession or custody of other persons' assets, or helps to invest or transfer them (article 2 paragraph 3 Intermediaries). The statute exempts: the Swiss National Bank; tax-exempted pension fund entities and person who provide services exclusively to these; and paragraph 3 Intermediaries who provide services exclusively to paragraph 2 Intermediaries.
At the start of the business relationship the finance intermediary must identify its contractual partner by means of adequate documents. It must request written identification of the beneficial owner, repeating such procedure should doubts subsequently arise. It must clarify the economic background of a transaction if it appears unusual or if there are grounds for suspecting that assets are the result of a crime or controlled by a criminal organization.
Finance Intermediaries must keep records of transactions and of the inquiries required by statute, so that compliance can be controlled easily. This must continue for at least 10 years after termination of the business relationship or conclusion of the transaction.
Possibly the farthest-reaching feature of the statute is the introduction of the duty (which hitherto was merely a right) of a financial intermediary to inform the new Money-Laundering Notification Office if he or she is aware, or suspicious, that assets are connected with an act punishable under article 305 bis SPC, or proceeds of a crime, or controlled by a criminal organization. An exception applies to attorneys-at-law and notaries public to the extent that their activities fall under the obligation to observe professional secrecy (article 321 SPC).
The intermediary must immediately block the assets and maintain the blockage until receipt of directions from the competent penal investigation authority. The blockage must not exceed five working days from the report to the Notification Office. The intermediary must not inform either the person concerned nor third parties of the notification. It cannot be held liable for a violation of official, professional or business secrecy, or for breach of contract, if under the circumstances it proceeded with due care. Violating the duty to notify incurs a fine of up to Swfr200,000 (US$142,602).
Existing supervisory authorities (eg for banking and insurance) retain their functions. All other financial intermediaries must join a recognized self-regulating organization or obtain a licence from the new Control Office for Money-Laundering.
If no referendum is called by January 29 1998, the statute will come into force next year.