The modern framework for an institution's defence

From criminal offence to preventive regime: the AMLA of 1997

The criminal provisions of 1990 and 1994 punished laundering after the fact. They did not create an administrative system that obliged all financial intermediaries to prevent it. That step followed with the Federal Act on Combating Money Laundering in the Financial Sector of 10 October 1997, today the Federal Act on Combating Money Laundering and Terrorist Financing (Anti-Money Laundering Act, AMLA), which entered into force on 1 April 1998.¹ The Act extended the due diligence duties that banks had observed since 1977 to the whole financial sector, including the so-called parabanking sector of fiduciaries, independent asset managers, currency dealers and payment service providers that had been so prominent in the Ticino cases. It required intermediaries outside the prudentially supervised sector to join a self-regulatory organization or, at first, to submit to direct supervision by a federal control authority. Chapter E.III describes how this system was transformed by the Financial Institutions Act of 2018.

The core duties of the AMLA are those that the cases of the 1980s had shown to be missing: identification of the contracting party (Art. 3 AMLA), establishment of the identity of the beneficial owner (Art. 4 AMLA), clarification of the background and purpose of unusual transactions or business relationships with increased risk (Art. 6 AMLA), and documentation (Art. 7 AMLA).² Article 305ter SCC remains in force alongside them as the criminal sanction for the most basic failure, the failure to identify the beneficial owner. The banks' due diligence agreement, which began as CDB 77 and is now in its 2020 version, continues to define the details of identification for banks, as Chapter D.III explains.

The duty to report and the MROS

The decisive innovation of the AMLA was the duty to report. Under Article 9(1)(a) AMLA, a financial intermediary must report immediately to the Money Laundering Reporting Office Switzerland (MROS) if it knows or has reasonable grounds to suspect that assets involved in a business relationship are connected with an offence under Article 260ter or 305bis SCC, derive from a felony or an aggravated tax misdemeanour, are subject to the power of disposal of a criminal or terrorist organization, or serve to finance terrorism. The same duty applies when the intermediary breaks off negotiations to establish a business relationship because of such a suspicion (Art. 9(1)(b) AMLA).³ Since 1 January 2023 the Act defines reasonable grounds for suspicion: they exist when the intermediary has a concrete indication or several indications that the criteria of paragraph 1(a) may be met and cannot dispel the suspicion through additional clarifications under Article 6 AMLA (Art. 9(1quater) AMLA). Lawyers and notaries are exempt insofar as their activity is protected by professional secrecy under Article 321 SCC (Art. 9(2) AMLA).⁴

The reporting system therefore combines two layers. The duty under Article 9 AMLA applies to the qualified suspicion. The right under Article 305ter(2) SCC, introduced in 1994, still covers observations that fall short of that threshold.⁵ A violation of the duty to report is punishable with a fine of up to CHF 500,000 if committed intentionally and up to CHF 150,000 if committed negligently (Art. 37 AMLA).⁶ After a report has been forwarded to a prosecution authority, the intermediary must freeze the assets concerned until it receives a ruling from that authority, but for at most five working days (Art. 10 AMLA).⁷ The MROS is part of the Federal Office of Police. It analyses the reports, obtains further information and passes cases to the prosecution authorities when it has reasonable grounds to suspect that an offence has been committed (Art. 23 AMLA).⁸

The number of reports has grown from a few hundred a year in the first years after 1998 to many thousands a year in the 2020s, partly as a result of the extension of the predicate offences to aggravated tax misdemeanours in 2016 and the clarification of the reporting threshold in 2023.⁹ Ticino's intermediaries contribute a significant share, reflecting the Italian client base and the density of fiduciaries and asset managers in Lugano. Chapter G.III analyses the statistics and the case work of the Ticino prosecution service.

Notes

1. Federal Finance Administration, Geldwäscherei (as above) (adoption on 10 October 1997; entry into force on 1 April 1998; creation of the MROS). Federal Act on Combating Money Laundering and Terrorist Financing of 10 October 1997 (Anti-Money Laundering Act, AMLA), SR 955.0. ↩
2. Arts. 3, 4, 6 and 7 AMLA, https://www.droit-bilingue.ch/en-de/9/95/955.0-3-7.html, https://www.droit-bilingue.ch/en-de/9/95/955.0-4-8.html, https://www.droit-bilingue.ch/en-de/9/95/955.0-6-10.html and https://www.droit-bilingue.ch/en-de/9/95/955.0-7-11.html (verification of the identity of the customer; identity of the beneficial owner; special duties of due diligence, including clarification of "the economic background and the purpose of a transaction or of a business relationship"; duty to keep records). ↩
3. Art. 9(1) AMLA, https://www.droit-bilingue.ch/en-de/9/95/955.0-9-15.html. ↩
4. Art. 9(1quater) and (2) AMLA (as above), para. 1quater in force since 1 January 2023. ↩
5. Art. 305ter(2) SCC (as above); Federal Office of Police, "Art. 305ter para. 2 SCC" (as above). ↩
6. Art. 37 AMLA, https://www.droit-bilingue.ch/en-de/9/95/955.0-37-55.html. ↩
7. Art. 10 AMLA, https://www.droit-bilingue.ch/en-de/9/95/955.0-10-18.html (as amended by the Federal Act of 19 March 2021, in force since 1 January 2023). ↩
8. Art. 23 AMLA, https://www.droit-bilingue.ch/en-de/9/95/955.0-23-36.html. ↩
9. MROS annual reports (Federal Office of Police). See Chapter G.III. ↩

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.