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GWG Revision 2021: more stringent customer due diligence

By 16.12.2019March 26th, 2024No Comments

GWG Revision 2021

Intensified customer due diligence

At the end of 2016, the Financial Action Task Force FATF published its fourth country report on Switzerland and found that Switzerland has effective measures to prevent money laundering overall. However, there were also a number of criticisms in the booklet and corresponding suggestions for improvement.

from Thorsten Hau Published on: 16.12.2019

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In a follow-up process between the FATF and Switzerland, these proposals have now been incorporated into law. They are expected to come into force in the course of 2021 as a revision of the GWG.

The draft submitted to Parliament for consultation contains various significant changes to the Swiss money laundering provisions.

Changes

  1. Tightening of customer due diligence (CDD)
    • Verification of the details of the beneficial owners
    • Obligation to periodically review and continuously update customer data
  2. Expansion of the persons and transactions covered
    • Consultants are now subordinate.
    • The value limits for compliance with due diligence obligations in precious metals will be lowered.
    • Associations with a money laundering risk must be entered in the commercial register.
  3. Adjustments to the reporting system
    • Longer processing period of 40 days for MROS. The business relationship may be terminated after this period has expired.
    • Foreign parent companies may be informed about suspicious activity reports.

The changes under 2. are of little relevance for established financial intermediaries. The changes under 3. only concern those employees who are involved in suspected cases of money laundering.

Verification WB

The changes under 1. relating to customer due diligence (CDD), on the other hand, are quite far-reaching, as they directly affect a large part of the operating business and practically the entire customer base.

The wording of the draft regarding the verification of information on beneficial owners reads: “The financial intermediary must take all due care required by the circumstances to determine the beneficial owner and verify their identity […]”

Even if this is already the case in many cases today, the requirements for the verifiability and quality of identification are increasing. The pressure to automate the CDD process for corporate customers will increase with this requirement.

Update

The wording regarding the obligation to periodically review is: “[Der Finanzintermediär] periodically reviews the required documents to ensure that they are up to date and updates them if necessary.”

This applies in particular to the customer data collected when the business relationship was established. This customer data must now also be checked periodically without reasonable doubt.

This means that the entire customer base must be regularly re-identified in order to compare the data with the existing data. A requirement that is associated with a great deal of effort without a fully digitalized process.

About fidentity

fidentity offers software for the completely digitalized implementation of finma-compliant online identification. The user takes a selfie and scans their ID in the browser on their cell phone. With the help of artificial intelligence (AI), fidentity carries out all checks, extracts relevant data and makes it available to the financial intermediary in real time.
fidentity is audited in accordance with ISAE300.

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