Intro

With its highly developed financial services system and strong economic and political commitment, Switzerland is a magnet for capital from both home and abroad. This also makes Switzerland particularly attractive for money laundering activities. In order to prevent “capital obtained from criminal activity” (“dirty money”) from entering the legal money cycle and thus undermining confidence in the financial center, the legislature enacted the Money Laundering Act (AMLA) in 1997. In parallel with criminal prosecution (Art. 305bis of the Swiss Criminal Code), the AMLA imposes extensive due diligence and reporting obligations on financial intermediaries. This creates two pillars for combating money laundering: criminal law and supervisory due diligence in the financial sector. Overall, the legislation aims to detect, report, and prevent criminal cash flows at an early stage so that they no longer enter the regular economic cycle.

Terms

Money laundering (Art. 305bis SCC): According to the Criminal Code, money laundering encompasses any act that is “likely to prevent the origin of assets from being traced or the assets from being traced or confiscated” if these assets originate from a crime or a serious tax offense, as the perpetrator knows or must assume. The concept of the predicate offense is central: only assets derived from a criminal offense (crime) – or, since 2016, from certain serious tax offenses (taxes > CHF 300,000) – can be the subject of money laundering.

• Predicate offense: The underlying criminal offense (e.g., drug trafficking, fraud, embezzlement) is referred to as the predicate offense. According to established case law, there is genuine competition between the predicate offense and money laundering, so that a criminal offense is not “worthwhile.” This means that the criminal authorities can prosecute perpetrators separately for both the predicate offense and the subsequent money laundering.

• Beneficial owner: In the AMLA, the beneficial owner is the natural person who is ultimately the owner or beneficiary of the assets, possibly through indirect control. Financial intermediaries must verify and document who the actual owner is behind legal entities or trusts in every business relationship. This identification of the beneficial owner is a core element of due diligence obligations.

• Due diligence: Under the AMLA, financial intermediaries must exercise “due diligence appropriate to the circumstances” in their customer relationships. This includes identifying the contracting party and the beneficial owner, obtaining additional information in the case of unusual transactions, and maintaining documented monitoring and control systems. The due diligence obligations are risk-based and depend on the circumstances of the individual case (e.g., transaction volume, country of origin, PEP status).

• Suspicious activity reporting: If a financial intermediary identifies concrete indications that assets may be of criminal origin, it must report this to the Money Laundering Reporting Office (MROS). The reporting obligation has been “unambiguously” applicable since 2023 at the latest whenever there are reasonable grounds for suspicion and the suspicion cannot be dispelled by additional clarifications. A report leads to the freezing of assets by MROS (Art. 10 AMLA).

Criminal law basics

In addition to criminal law, the Money Laundering Act imposes binding due diligence obligations on the financial sector (banks, securities dealers, insurers, independent asset managers, trustees, etc.). These obligations serve as a preventive measure to stop money laundering in everyday business. Important aspects are:

• Identification and verification: Financial intermediaries must identify their contractual partners using official identification documents and record all relevant data (name, address, date of birth, nationality). They must also identify the beneficial owner of the assets involved. Only when it is clear who ultimately benefits can suspicions be classified.

• Duty of clarification: In the case of unusual or suspicious transactions (e.g., complex structures, large amounts of cash, transactions with high-risk countries or politically exposed persons), an in-depth review is required. This includes obtaining information about the economic background and purpose and, if necessary, a risk classification of the business relationship. Unclear cash flows must be clarified – if the origin appears to be illegal, the reporting threshold has been reached.

• Documentation and internal control: Financial intermediaries must record what data they have collected and what clarifications they have made. Internal instructions and guidelines for combating money laundering must be issued. Employee training and regular checks must ensure that the rules are followed. Institutions are required to have an effective compliance system in place.

• Reporting obligation (Art. 9 AMLA): If there is a reasonable suspicion of money laundering or terrorist financing, the Money Laundering Reporting Office (MROS) must be informed immediately (before the transaction is completed). The financial intermediary may then only continue the relationship to a limited extent (Art. 10 AMLA, asset freeze) until MROS gives its approval. A suspicion is sufficient to trigger a report. The reporting obligation is a key monitoring tool. Financial intermediaries must define internal reporting processes and submit reports via the goAML system.

• Supervision: FINMA monitors banks, stock exchange traders, insurance companies, etc. for compliance with money laundering regulations. Many due diligence obligations are also specified in the AMLA-FINMA Ordinance and FINMA circulars. In Switzerland, there are also self-regulatory organizations (SROs) for certain industries (e.g., trustees, insurance companies) that are responsible for auditing their members. Overall, FINMA, recognized audit firms, and SROs monitor the implementation of the regulations in the institutions.

Typical case scenarios and practical examples

In practice, cases of suspected money laundering often arise in certain typical scenarios, as indicated by both MROS case reports and case law. Examples include:

• Cash transactions: Large cash withdrawals or deposits, e.g. for the purchase of luxury goods, jewelry, or works of art, which at first glance do not appear to correspond to the customer's income. Money launderers often use this method to bring anonymous cash holdings into the system. (Since 2021, certain cash deposits > CHF 25,000 are subject to reporting requirements.)

• Use of straw men and letterbox companies: Criminals often use third parties to set up accounts or companies behind which they themselves remain invisible. One example is the case of Russian oligarch Roldugin (see Gazprombank ruling): Here, accounts were managed through a complex network of companies, concealing the real financiers. Financial intermediaries must be particularly vigilant in cases of unclear ownership structures.

• Crypto transactions: Cryptocurrencies can facilitate money laundering. Money launderers use crypto exchanges to convert illegal money into decentralized currencies in order to cover their tracks. Even though crypto assets are now regulated in Switzerland, transfers abroad or through unlicensed providers remain risky. (FINMA and MROS repeatedly warn against anonymity through mixers/tumblers and cross-border crypto flows.)

• Trust and investment transactions: Criminals often invest dirty money through professional services. Examples include shell companies, trust accounts, or opaque investments (trusts, foundations). Unusual securities or real estate transactions (significantly inflated purchase prices, unclear buyer backgrounds) can also raise suspicion.

• International payments and offshore structures: Financial transactions to or from countries with lax laws or poor money laundering controls require increased caution. Movements to offshore areas or via trusted correspondent banks are often used to conceal the origin of the money.

• Combination with other offenses: Money laundering occurs in many areas: drug trafficking, fraud, corruption, human trafficking, etc. Knowledge of an underlying offense therefore often leads to suspicion of money laundering (e.g., a restaurant that suddenly starts doing a lot of business in cash, or an unexpected purchase of the crime scene).

Although these scenarios are generally known, they always require careful assessment on a case-by-case basis in practice. To this end, MROS regularly publishes typology reports to raise awareness among financial intermediaries of new money laundering patterns (e.g., ongoing reports on crypto, international transactions, human trafficking, etc.).

Practical tips for avoiding violations

• Systematically implement KYC: Document how you identify and verify customers and beneficial owners. Establish internal guidelines for particularly high-risk customers (e.g., PEPs, high-risk countries).

• Monitor transactions: Set up controls (e.g., threshold monitoring, pattern recognition). Unusual clusters or changes in transaction patterns should trigger a review.

• Documentation: Create meaningful files on clarifications. Each step (e.g., source verification, fund origin, contract documents) should be recorded in a traceable manner.

• Good justifications reduce liability risks.

• Reporting in case of doubt: If you have serious doubts, do not hesitate to send a suspicious activity report to MROS. Even in unclear cases, reporting protects you from liability risks (the law refers to “good faith” when reporting). If in doubt, give priority to ensuring legality.

• Training and compliance culture: Train your employees regularly on AML regulations, awareness of warning signs (e.g., unusual cash requests), and procedures for reporting suspicious activity. Compliance must not be just a matter for senior management: everyone must be able to recognize and report suspicious activity.

• Seek legal advice at an early stage: In the case of complex transactions or suspicious circumstances (e.g., cross-border trust structures), consulting an AML legal advisor can help to define boundaries and fulfill obligations correctly.

Defense strategies

Courts require strict criteria to be met before a conviction can be handed down. In practice, the following approaches can be taken based on possible defense positions:

• No predicate offense: If there is no predicate offense corresponding to the act (e.g., only administrative offenses or money from a permissible transaction), intent to commit a crime cannot be assumed.

• No knowledge (subjective element): The defendant must have known that the money was criminal (or at least be prepared for this possibility). If they did not know this, there is no intent.

• Permitted conduct: Not every transaction involving prohibited assets is punishable. For example, simple financial market transactions or legal acts do not fall under Art. 305bis as long as they are legal or purely civil in nature. (The Federal Supreme Court emphasizes that investment transactions are not in themselves money laundering as long as they do not have a specific deceptive character.)

• No sufficient connection: Even if criminal funds are involved, an offense may be denied due to a lack of adequate causality. This is the case, for example, if an intermediate step (e.g., the purchase of a public bond) constitutes a completely independent transaction.

• Breach of duty of care without criminal offense: In the case of an accusation under Art. 305ter, it can be argued that all necessary clarifications were carried out properly or that ignorance was neither negligent nor grossly negligent. Here, it helps to present careful documentation of all compliance measures.

Ultimately, the circumstances of the individual case determine the success of these approaches. The courts examine carefully whether both objective elements of the offense and subjective intent are fulfilled. Clear accounting, conclusive process documentation, and an orderly audit process can be of decisive help to a defendant in raising doubts about the allegations.

Questions or comments?

Feel free to contact us using the contact form or via WhatsApp.t form.