The Anti-Money Laundering Act, known in Switzerland as the GwG, is the Swiss basis for combating money laundering and terrorist financing in the financial sector. It obliges financial intermediaries to exercise due diligence when taking on and maintaining business relationships, and governs what must happen where suspicion arises.
Who is covered
The act addresses financial intermediaries. These include banks and insurers, but also persons who on a professional basis accept or hold assets belonging to others, or assist in investing or transferring them. Whether a specific activity is covered depends on how it is arranged and is not always obvious — particularly with asset management, fiduciary activity, and the administration of companies and trusts. That classification is a legal question and belongs professionally clarified where there is doubt.
The due diligence duties
At its core the act requires four things. First, identifying the contracting party. Second, determining the beneficial owner, that is the natural person behind the structure. Third, special enquiries for relationships or transactions with elevated risk. Fourth, documenting all enquiries in a form that allows a qualified third party to form a reliable judgement. That last requirement is often underestimated, although it is decisive under review.
The risk-based approach
The act does not require the same depth everywhere but a gradation by risk. The financial intermediary must set criteria for recognising relationships with elevated risk and carry out additional enquiries for those. Typical risk factors include domicile in certain countries, complex structures, the nature of the assets introduced, and the involvement of politically exposed persons. What matters is that your own risk rating is documented and reasoned.
Reporting on suspicion
Where reasonable suspicion arises of a connection to money laundering or other matters named in the act, a report to the competent reporting office is provided for. Associated conduct duties differ from the normal course of business. Because deadlines, confidentiality questions and possible consequences converge here, this is the area in which an organisation should determine in advance who decides and who is brought in — not once the situation arises.
Relationship to KYC and UBO
KYC describes the process; for financial intermediaries in Switzerland the GwG supplies a substantial part of its legal basis. Determining the beneficial owner is one of the central duties and at the same time the point where cross-border structures become demanding, because other jurisdictions’ regimes apply different thresholds. Anyone operating internationally must determine the governing rule per beneficial owner rather than applying a single assumption.
What this means in practice
For a practice subject to the act, or working with counterparties subject to it, three points follow. First, your own subjection and its extent belong legally clarified rather than assumed. Second, the process should produce evidence as a by-product, because documentation is decisive under review. Third, responsibilities for a suspicion case belong settled in advance. Legal assessment in the individual case remains in every event a matter for the responsible person and their advisers.