Switzerland: the new LBA Ordinance
By: Sebastien Moret

In Switzerland, the Federal Law on the Prevention of Money Laundering in the Financial Sector of October 10, 1997 (hereinafter 'MLL') regulates the measures to combat money laundering within the meaning of article 305bis of the Swiss Penal Code.

By way of background, the MLL obliges all financial intermediaries to identify all clients and to establish the beneficial owners of the assets. Furthermore, the latter must report any justified suspicion of money laundering to the authorities and freeze the suspicious assets. As a framework law, the MLL sets out fundamental principles that have to be elaborated. Therefore, the authorities administering the MLL have to enact implementing regulations allowing them to adapt detailed rules to the field of activity they are in charge of monitoring.

In this regard, the Federal Money Laundering Control Authority adopted a new Ordinance concerning the professional activity of financial intermediary in the non-banking sector that entered into force on September 15, 2002. This Ordinance clarifies the determinant criteria to consider that a financial intermediary acts 'on a professional basis' whenever, in the exercise of an activity subjected to Article 2 paragraph 3 MLL.

Further to the said Ordinance, such financial intermediary is deemed to be acting 'whenever, in the exercise of an activity subjected to Article 2 paragraph 3 MLL:

he realizes an income of more than CHF 20’000 per civil year

or establishes/maintains a contractual relationship with more than 10 contracting partners during a civil year

or in case of lasting business has the power of disposal on patrimonial value worth more than CHF 5’000’000

or makes commercial transactions worth more than CHF 2’000’000 per civil year.

If one does not meet any of these criteria in the exercise of an activity subjected to Article 2 paragraph 3 MLL, one is not considered as financial intermediary and therefore does not need to be registered with one’s related self regulating body as per articles 13 and 24 MLL. In other words, one will be deemed as a financial intermediary as per Article 2 paragraph 3 MLL if just one of the above criteria is met.

Sebastien Moret
Attotney with Law Firm Lohman
11 Rue Verdaine
Case Postale 3377
1211 Geneva 3, Switzerland
Tel: + 41 22 317 8020 Fax: + 41 22 317 8030
E-mail: sebastien.moret@lohman-law.com