The Federal Council has proposed a new bill to strengthen anti-money laundering measures and set new transparency requirements for legal entities. The bill will provide new diligence and reporting obligations with respect to beneficial owners.

Following the recommendations of the Financial Action Task Force (FATF) and the Global Forum on Transparency and Exchange of Information for Tax Purposes, the Federal Council adopted in May 2024 the dispatch on the draft law on the transparency of legal entities and the identification of beneficial owners. This bill aims at strengthening anti-money laundering measures and provides for the adoption of a new Act on the Transparency of Legal Entities (ATLE) and the amendment of existing legislation, in particular the Anti-Money Laundering Act (AMLA).

The ATLE is intended to have a broad scope of application and to impose transparency obligations on companies incorporated under Swiss law (including, in particular, corporations, limited liability companies, cooperatives, SICAVs and SICAFs), as well as on foundations and associations required to be registered with the Commercial Register, on trustees domiciled or having their registered office in Switzerland or managing trusts in Switzerland, and, under certain specific circumstances, on legal entities incorporated under foreign law.

The draft bill includes in particular the following points:

-          Introduction of new obligations regarding the identification of beneficial owners: The ATLE standardizes the rules by providing for a single legal regime with identical obligations and sanctions for all types of entities. Under this new regime, companies and other legal entities subject to the new legislation are required to identify and verify the information provided by shareholders, and to report this information to the Federal Transparency Registry (see below);

-          Introduction of an obligation to disclose fiduciary relationships to the company and to the Commercial Register: directors, managers, and shareholders acting in a fiduciary capacity, i.e. those who exercise their functions or the property rights attached to a share in the name and for the account of a third party, shall disclose the fiduciary relationship and certain personal information to the company, which in turn shall disclose this information to the Commercial Register. The status of a director, manager or shareholder acting in a fiduciary capacity will be recorded in the Commercial Register;

-          Creation of a federal register, known as the "Transparency Register": companies and other legal entities subject to the new legislation are required to disclose, within a specified period, the identity of their beneficial owners (UBO), in particular their surnames, first names, dates of birth, nationalities, cities and countries of residence, as well as the nature and extent of control exercised. This register is not public but would be accessible to certain authorities, in particular law enforcement authorities and financial intermediaries; and

-          Introduction of criminal sanctions for breaches of the obligations provided for in the new legislation: intentional breach of the various reporting obligations to the company or other legal entity and to the Commercial Register are sanctioned by a fine of up to CHF 500,000.

The draft bill also provides for the amendment of certain legal provisions, in particular the Anti-Money Laundering Act (AMLA). Certain advisory activities with a high risk of money laundering will be subject to due diligence and reporting requirements to the MROS (Money Laundering Reporting Office Switzerland) under the existing legislation applicable to financial intermediaries. In particular, lawyers, notaries and other persons providing legal or accounting advice are deemed to be advisors if they assist their clients in preparing or carrying out certain transactions, including the sale or purchase of real estate, the incorporation of a company, foundation or trust, the management or administration of a company, foundation or trust, the set-up of contributions to a company, the sale or purchase of a company or the domiciliation of a company. In addition, the thresholds which trigger due diligence obligations for trading in real estate, precious metals and stones will be either eliminated or lowered.

The bill will now be submitted to the Federal Chambers for discussion and adoption. If the legislative process is completed, the Federal Council expects the new bill to enter into force in 2026 at the earliest.

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