Restriction of cash transactions
On January 1, 2016, amendments to the Anti-Money Laundering Act will come into force, which now provide for due diligence and reporting obligations for traders for cash transactions of CHF 100,000 or more, with the aim of implementing the recommendations of the "Groupe d'action financière" (FATF) revised in 2012.
The Anti-Money Laundering Act is therefore no longer aimed exclusively at financial intermediaries, but effectively puts traders on an equal footing with them.
The FATF is an international body of experts based in Paris with the aim of combating money laundering, terrorist financing and the financing of weapons of mass destruction and standardizing the fight against these crimes internationally. It has 36 members, including Switzerland as a founding member.
The FATF has drawn up 40 recommendations, which are intended to form the international minimum standard on which the Swiss legislative revision of December 2014 is based. As part of the implementation of these FATF recommendations in 2012, tax offenses were also included in the list of predicate offenses for money laundering and terrorist financing.
The amendment to the law relates to cash transactions:
Subordination of natural and legal persons who trade commercially in goods and accept cash (traders)
Due diligence obligations for traders in cash transactions of more than CHF 100,000
Obligation to report knowledge or reasonable suspicion of the illegal origin of the cash payment means
Duty to audit compliance with due diligence and reporting obligations of traders by an auditor
Subsidiary reporting obligation of the auditors
The new provisions for commercial transactions only apply to cash transactions of over CHF 100,000, regardless of whether the payment is made in one or more tranches. All payments via so-called financial intermediaries (bank, post office, credit card companies, etc.) are therefore excluded from these provisions.
According to the explanatory report of the Federal Department of Finance, the new legal provisions mainly affect the retail trade in watches and jewelry, automobiles, the art trade, boat and yacht building and the real estate trade.
According to Art. 8a para. 1. nMLA, traders must comply with the due diligence obligations of a financial intermediary for cash transactions of more than CHF 100,000 (largely the same as the due diligence obligations of a financial intermediary):
identify the contracting party,
determine the beneficial owner,
and document this adequately.
Art. 17 of the Anti-Money Laundering Ordinance (AMLO) defines identification as the recording of surname, first name, address, date of birth and nationality, whereby adequate documentation is described as the production of a copy of an official identity document with a photograph and the provision of a note stating that the original has been inspected. In the case of a proxy, the identification obligation applies to the proxy and the person he or she represents. The documentation must be kept for ten years. The use of a sample form enclosed with the ordinance is recommended.
The duties of clarification include determining the beneficial owner of the cash and, after the transaction has been completed, the beneficial owner of the purchased item. If this is not the buyer present, written information about this is required, including the above-mentioned identification requirements (copy of an official identity document). If the beneficial owner is a legal entity, a partnership or a domiciliary company, the natural person who controls this company must be identified and documented. The legislator assumes that this is one or more natural persons who directly or indirectly, alone or in joint agreement with third parties, hold at least 25 percent of the capital or votes, or exercise significant influence in some other way.
Article 8a para. 2 AMLA describes the obligations of the trader with regard to the special clarifications to be made, in that he must check the background and purpose of a transaction, in particular the origin of the money if this appears unusual or if there are indications of money laundering. In particular, indications must be taken into account that assets could originate from a crime or a qualified tax offence (Art. 305bis para. 1bis SCC) or that their power of disposal could be subject to a criminal organization (Art. 260ter para. 1 SCC). If additional investigations cannot dispel the trader's suspicions, he/she must report the matter to the Money Laundering Reporting Office Switzerland (MROS).
Art. 15 nGwG requires a special audit of compliance with due diligence obligations for traders by an auditor. This legal provision comes into effect from a cash transaction (greater than CHF 100,000). The auditors are subject to a subsidiary reporting obligation. Anyone who deliberately fails to carry out such an audit is liable to prosecution under Art. 38 AMLA and may be fined up to CHF 100,000.
We recommend that affected merchants refrain from cash transactions of more than CHF 100,000 from January 1, 2016 and process payments exclusively via financial intermediaries (bank, post office, credit card companies, etc.) and thus outsource the duty of due diligence and reporting to them.
