What Startups Need to Know About Switzerland's Anti-Money Laundering Act
The Anti-Money Laundering Act (AMLA) is aimed at combating money laundering and terrorist financing and sets out due diligence obligations of financial intermediaries and persons who trade in physical goods and in doing so accept cash. Companies outside of the traditional financial sector may also fall under the AMLA, particularly if they offer services related to assets or the processing of payments.
Who is considered to be a financial intermediary?
A financial intermediary for the purpose of the AMLA is anyone who on a professional basis accepts or holds assets belonging to others or who assists in the investment or transfer of such assets.
Platforms offering trustee functions, marketplaces that transfer payments from buyers to sellers, or providers of wallets for digital assets are all considered to be financial intermediaries. The AMLA may also apply in the property or mobility sectors, for example if a platform administers rent deposits or enables users to make credit deposits for services and use them at a later date.
Pure software companies that do not deal with customer money, and traditional e-commerce businesses that do not process payments, are typically not subject to the AMLA. However, it is not relevant whether a company considers itself to be a "tech business"; what matters is the actual handling of third-party funds and the role played within the flow of payments.
What obligations arise under the AMLA?
Companies that act as financial intermediaries have various statutory due diligence obligations. First and foremost, there is an obligation to identify the customer and establish the identity of the beneficial owner prior to entering into a business relationship. Furthermore, financial intermediaries are obliged to document and keep records of relevant information and must submit a suspicious activity report to the Money Laundering Reporting Office if they have reasonable grounds to suspect that prohibited activities have taken place. Depending on the business model, an approval issued by the Swiss Financial Market Supervisory Authority (FINMA) or an affiliation to a self-regulatory organization (SRO) is required.
Practical relevance for startups
For companies, the question of AML relevance arises during the phase in which a new product or service is being developed. They need to be mindful of the fact that functionalities such as interim accounts, escrow-type mechanisms or the management of credit balances, which appear attractive from a user's perspective, may have unintended legal consequences.
In practice, startups may benefit from certain exemptions and lighter regulatory requirements. For one thing, certain activities are exempt. In addition, the exemption provisions lay down criteria such as turnover, number of business relationships or transaction volume, which determine whether or not the AMLA is applicable.
Against this background, it is advisable to check as early as possible whether the business model might be subject to the provisions of the AMLA.