Supervision, industry standards and capital rules

FINMA and the absence of a special regime

Swiss banking law contains no special rules for commodity trade finance. A bank that finances traders is subject to the general requirements of the Banking Act and the Banking Ordinance on organization, risk management and capital. It is also bound by the anti-money laundering duties of the Anti-Money Laundering Act (AMLA) and FINMA's Anti-Money Laundering Ordinance, by sanctions law and by the rules of professional conduct of the Swiss Bankers Association. FINMA supervises compliance with these rules through its own on-site reviews and through the regulatory audits carried out by audit firms. In the course of research for this chapter, no FINMA circular, guidance or supervisory communication devoted specifically to commodity trade finance could be found. FINMA's published analyses of money laundering risks for 2021 and 2023, including the Risk Monitor of November 2023, concentrate on cross-border wealth management, politically exposed persons, complex structures, Kryptowerte und Digital Assets and sanctions. They do not single out commodity trade finance as a separate risk area.¹

This silence does not mean that FINMA ignores the business. Public Eye reported in 2020 that only one or two of the roughly thirty anti-money laundering on-site reviews carried out by FINMA each year related specifically to trade finance.² FINMA's enforcement in the commodity sector has concerned mainly corruption and money laundering in the relationships of private banks with state oil companies, in particular in the Petrobras and PDVSA cases. Chapter G.III treats these cases. For a bank in Lugano, the regulatory framework for trade finance therefore consists of general principles applied to a specific business. The bank must identify and verify the client and its beneficial owners (Arts. 3 and 4 AMLA), clarify the economic background of unusual transactions or those with increased risk (Art. 6 AMLA), and classify relationships and transactions with increased risk according to criteria set out in FINMA's ordinance.³ It must also report to the Money Laundering Reporting Office (MROS) where it knows or has reasonable grounds to suspect that assets are connected with a crime (Art. 9 AMLA). Chapter G.III describes these duties and the reform of the AMLA.

The Federal Council's report of 2020

The most detailed official analysis of the subject is the Federal Council's report of 26 February 2020, prepared in response to a postulate by Anne Seydoux-Christe and adopted shortly before the collapses of that year. The report found that the main money laundering risk in commodity trading stems from corruption. In a sample of 367 business relationships reported to MROS between 2016 and 2018, corruption was the suspected predicate offence in about 53 per cent of cases. Companies active in the trade of fossil fuels appeared in 85 per cent of the sample.⁴ Trading on own account is not subject to the AMLA, because no third-party assets are involved. Only about twenty smaller traders acting for third parties were affiliated with self-regulatory organizations.⁵ The anti-money laundering burden in commodity trade therefore rests almost entirely on the banks that finance the traders.

The report also identified the limits of this burden. A lending bank cannot monitor how the proceeds are used once they have been paid to third parties. Suspicious activity reports in the commodity sector rarely originated from the financing banks themselves and mostly followed external information such as investigative journalism. In syndicated financing, the compliance function is separated from the credit decision, and the transparency available to the bank depends on the instrument used.⁶ The Federal Council concluded that the existing legal framework was largely adequate and that subjecting own-account traders to the AMLA was not justified by a cost-benefit analysis. It proposed five areas for action. These included the effective implementation of non-binding instruments, the development of sector-specific due diligence guidelines by the industry and a review of the scope of the reporting duty under Article 9 AMLA.⁷

Notes

1. FINMA, "Risikosituation im Zusammenhang mit Geldwäscherei (2021)", https://www.finma.ch/de/dokumentation/dossier/dossier-geldwaeschereibekaempfung/ risikosituation-im-zusammenhang-mit-geldwaescherei--2021; FINMA, "Geldwäscherei und Sanktionen (2023)", https://www.finma.ch/de/dokumentation/dossier/dossier-geldwaeschereibekaempfung/geldwaescherei-und-sanktionen-2023/ (referring to the FINMA Risk Monitor 2023 of 9 November 2023). Neither page contains statements on commodity trade finance. ↩
2. Public Eye, Trade Finance Demystified (above), 4. ↩
3. Federal Act of 10 October 1997 on Combating Money Laundering and Terrorist Financing (Anti-Money Laundering Act, AMLA), SR 955.0, Arts. 3, 4, 6 and 9; FINMA Anti-Money Laundering Ordinance of 3 June 2015 (AMLO-FINMA), SR 955.033.0, Art. 13 ("Geschäftsbeziehungen mit erhöhten Risiken"). Texts at droit-bilingue.ch, https://www.droit-bilingue.ch/en-de/9/95/955.0-3-7.html, https://www.droit-bilingue.ch/en-de/9/95/955.0-6-10.html, https://www.droit-bilingue.ch/en-de/9/95/955.0-9-15.html, https://www.droit-bilingue.ch/en-de/9/95/955.0-10-18.html (Art. 10, freezing of assets) and https://www.droit-bilingue.ch/de-fr/9/95/955.033.0-13-17.html. ↩
4. Federal Council, report of 26 February 2020 (above), 6–7; Cash.ch, "Bundesrat will Mittel gegen Geldwäscherei im Rohstoffhandel stärken", 26 February 2020, https://www.cash.ch/news/politik/bundesrat-mittel-gegen-geldwascherei-im-rohstoffhandel-starken-431031. ↩
5. Federal Council, report of 26 February 2020 (above), 8 ("Der Handel mit Rohstoffen auf eigene Rechnung unterliegt in der Schweiz nicht dem Geldwäschereigesetz"). ↩
6. Federal Council, report of 26 February 2020 (above), 11 and 14–16. ↩
7. Federal Council, report of 26 February 2020 (above), 18–19. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.