AMLA Interpretation and application
Supervised and recognised institutions
1 Regulation and establishing practice
The AMLCA specifies in detail the provisions of the AMLA for the non-banking sector through ordinances, circulars (French, German, Italian) and through the development of its practice. As the interpretation of the term "on a professional basis (i.e. as a commercial undertaking)" represents a key element for determining the subordination of financial intermediaries in the non-banking sector, the AMLCA has issued the Ordinance of the Anti-Money Laundering Control Authority concerning the Financial Intermediation in the Non-banking Sector as a Commercial Undertaking
2 Instruments of supervision
Instruments used by the AMLCA for supervision purposes include a regulating and licensing procedure for the SROs and DSFIs, a comprehensive reporting system, high-performance data management using cutting edge hardware and software, as well as direct random sampling.
The AMLCA supervises compliance with the legislative provisions of the AMLA, as well as of the implementing regulations in its area of supervision. It issues decisions necessary for the execution of the law. The AMLCA may demand all such information and documentation necessary from the SROs, the DSFIs and from their auditors, required for the fulfilment of its tasks. In addition it may demand information from financial intermediaries suspected to be operating without a licence or without affiliation to an SRO. The AMLA audit reports on the DSFIs, the annual and audit reports of the SROs, the obligations of approval and notification,;information passed on by other government authorities, clients or third parties, as well as reports in the media, all serve as information tools. In its market supervision activities, the AMLCA actively monitors developments in financial intermediaries and in financial markets in those areas pertinent to the AMLA and introduces appropriate measures accordingly.
Appeals can be lodged against AMLA-related decisions that have been issued by the AMLCA to the Federal Administrative Court and from there on to the Swiss Federal Supreme Court (e.g. decisions concerning recognition or licensing, as well as decisions based on Art. 20 AMLA (English translation).
In the case of conducting business without a licence, violation of the obligation to report, or violation of decisions issued under threat of fines (Art. 36 - 38 AMLA) (English translation), the AMLCA can denounce a financial intermediary to the Federal Department of Finance (FDF). The authority vested with prosecution and judicial authority, in such cases, is the FDF. The AMLCA itself cannot issue administrative penalties (e.g. fines).
3 Supervision of the self-regulating organisations
The AMLCA recognises and supervises the SROs. In addition it counsels the SROs in the area of organisational development and provides guidance on general issues and problems. The SROs represent the extended arm of the AMLCA, as it were, by seeing to compliance with AMLA-related provisions on the part of their affiliated financial intermediaries. The AMLCA involves the SROs in the development of the regulatory process, as well as in the development of its practice of establishing scope of application and obligations with respect to the AMLA for the non-banking sector.
In its procedures for according recognition, the AMLCA examines whether an SRO fulfils the prerequisites for recognition, i.e. whether it has safeguards to ensure compliance with its legal obligations. If it can be determined that this is the case, then the AMLCA grants recognition to an SRO. Basically, each SRO has the right to be recognised, if it fulfils the legal provisions and employs enough qualified staff to ensure that it can consistently fulfil the tasks conferred to it without causing a conflict of interest. An SRO must provide guarantees to ensure consistent compliance with the legal obligations of its affiliated financial intermediaries.
After prior warning, the AMLCA can withdraw this recognition from an SRO if it no longer fulfils the conditions laid down in the recognition decision or no longer respects its legal obligations. In such a case, supervision of the financial intermediary affiliated to the SRO is transferred to direct subordination under the AMLCA, if it does not become affiliated to another recognised SRO within two months. An exception is made in the case of lawyers and notaries. It is mandatory for them to join an alternative SRO within two months; otherwise they may no longer offer financial services.
The AMLCA approves the statutes and regulations issued by the SROs as per Art. 25 AMLA (English translation) and certain guidelines and AMLA training plans, as well as modifications made to the same, and ensures that the SRO implements its regulations. The AMLCA must be informed of penalties imposed taken by an SRO; and it also approves changes in personnel. Supervision is carried out by means of an annual report submitted at least once a year based on content and structure set down by the AMLCA. The annual report must include information about the organisation of the SRO, any changes in the structure of its membership, the activities of the individual units of the SRO, its auditing activities over affiliated members, and on any activities and discoveries related to money laundering. The AMLCA normally conducts an annual on-the-spot audit on SROs. In the case of the SRO of the Swiss Bar Association and the Swiss Federation of Notaries, the AMLCA is obliged to delegate this task to an external auditor. In case of violation of the prerequisites for recognition or of the AMLA, the AMLCA may prescribe and implement measures for the restoration of compliance with the law.
In order for self-regulation to function seamlessly, regular information exchange must take place between the AMLCA and the SROs. This is carried out through various regular platforms, such as the meetings of the SRO Forum, the Coordination Conference and the Coordination Talks. The SRO Forum is organised each time by one of the SROs; it is a discussion forum, which offers the SROs the opportunity to discuss their queries and problems in relation to the interpretation and implementation of the AMLA, as well as to coordinate their activities (in the area of training for example). The AMLCA regularly participates in these fora. The annual Coordination Conference organised by the AMLCA, offers both the AMLCA and the SROs the opportunity of examining together current issues relating to the AMLA. The Coordination Talks represent a platform for an informal think-tank on tabled questions among representatives of the AMLCA and the SROs.
Upon request the AMLCA issues a licence to a DSFI to operate in the capacity of a financial intermediary, providing it fulfils the relevant legal stipulations (Art. 14, para. 2 AMLA; English translation). These prerequisites include providing a guarantee for the fulfilment of the legal obligations. Accordingly, the structure of the organisation, its personnel, as well as its expertise in AMLA matters of those responsible, will thus be assessed.
The AMLCA exercise supervision over the DSFIs; it may conduct audits on-the-spot itself or appoint a designated auditor to do so. The DSFIs are obliged to submit periodically (usually annually) an AMLA audit report from an auditor accredited by the AMLCA. These reports form an important pillar of supervision. Through the AMLA audit reports, the AMLCA can gain an insight into the extent of the fulfilment of the relevant legal obligations by the DSFIs.
If the AMLCA learns of a breach of the AMLA stipulations by a DSFI, it will take the necessary measures to restore compliance with the regulations. The AMLCA is required to respond proportionately. It can issue decisions under a threat of fines in accordance with Art. 38 AMLA (English translation), if the decision is not complied with. The AMLCA can, however, also apply less severe measures, such as, issuing a warning or admonition. The most severe measure it can apply is to withdraw the DSFI's licence to operate, if the DSFI, and the persons entrusted with its management and administration, no longer fulfil the stipulations of the licence, or, if the DSFI is repeatedly refractory in fulfilling its legal obligations, or seriously in breach of them. In the case of a DSFI whose main activity is financial intermediation, depending on its legal form, when withdrawing its licence the AMLCA will normally order the liquidation of the DSFI, or its removal from the register of commerce, to prevent it from exercising an illegal activity.
5 Market supervision
The AMLCA's tasks include constantly monitoring and analysing the market, identifying possible financial intermediaries that are neither licensed by them, nor affiliated with an SRO, and brings them under its supervision, or, enforces affiliation with an SRO as the case may be, or, prohibits them from exercising their activities. To this end, the AMLCA can also resort to measures to restore legal order, for example, an on-the-spot audit for clarification as to whether financial intermediary services are indeed being offered. The AMLCA can liquidate or remove from the register of commerce, a financial intermediary operating illegally, i.e. a financial intermediary subject to subordination without an affiliation to an SRO and without a licence from the AMLCA, who is grossly in breach of the obligations of the AMLA or is refractory. In accordance with Art. 36 AMLA, it can additionally bring charges against the financial intermediary.
Market supervision is restricted, however, to the question of whether an activity falls within the scope of the AMLA and therefore falls subject to it. The AMLCA constantly observes developments in the financial services market in order to recognise activities relevant to money laundering. How the individual financial intermediary provides his or her services and fulfils obligations towards a client does not form part of market supervision. Consumer protection is not one of the AMLCA's tasks.
The basis for the AMLCA's market supervision is provided by its own research (i.e. screening), collating information from financial intermediaries, SROs and other authorities, as well as from media reports. Parallel to carrying out general research, the AMLCA also initiates surveillance activities on a geographic or sector basis.
6 Auditing and accreditation of auditors
In accordance with Art. 18, para. 2 AMLA (English translation), the AMLCA can carry out an on-the-spot audit at a DSFI or can appoint an external auditor designated by the AMLCA to do so. The AMLCA has decided to institute a system of accredited auditors. For the AMLA audits of DSFIs, the AMLCA only accredits those auditors who fulfil rigorous requirements based on a duty statement (French, German, Italian), such as for example, the requirement to dispose of at least five AMLA audit mandates within the year following accreditation. This ensures that only those auditors with specialist knowledge of the AMLA are accredited.
Each DSFI is obliged to select an AMLA auditor amongst those accredited by the AMLCA and to mandate it with the AMLA audit of its business. The AMLA auditors accredited by the AMLCA are contracted by the DSFIs under private law. Once the AMLA audit is completed the auditors automatically send their report to the AMLCA; the AMLCA then makes a thorough analysis of this report. It supervises the work of the accredited auditors by also making periodic inspections itself on-the-spot at the DSFIs. Therefore, at least one out of the five AMLA audit mandates has to be a DSFI mandate in order to uphold the accreditation. The AMLCA exercises influence over the auditing process, inasmuch as it provides a model for standardised AMLA audit reports and provides professional guidance within the scope of its remit. The AMLCA may conduct on-the-spot audits itself in exceptional cases.
DSFIs meeting certain requirements, and by virtue of the nature of their services and their client base, displaying low risks of potential money laundering and low audit risks, can apply to the AMLCA to adopt a prolonged, risk-oriented audit cycle.
In the case of the SROs, the AMLCA conducts the audit on location itself, with the exception of the SRO of the lawyers' and notaries' professional associations. In carrying out these audits, the AMLCA also checks the internal organisation and processes of the SROs. Additionally, the AMLCA can carry out on-the-spot audits within the context of its market supervision activities.
7 National and international cooperation
The AMLCA works closely with the supervisory authorities established under the special laws, with MROS and with the national and cantonal prosecuting authorities. Depending on the circumstances, this cooperation can take the form of legal aid, administrative assistance or as an informal information exchange.
The AMLCA can request foreign authorities responsible for financial market supervision to provide it with information or documents required for the performance of its duties. As a general rule, the AMLCA guarantees the provision of administrative assistance to foreign supervisory authorities as long as the legislative prerequisites (Art. 31, para. 2 AMLA (English translation) are met.
In issues falling under its area of remit, the AMLCA is active in various inter-departmental working groups and comments on matters relating to legislative procedures. In addition, it is part of the Swiss delegation to the FATF.
8 AMLCA funding
The AMLCA constitutes part of the Federal Finance Administration, whose costs are met through the general budget. The AMLCA levies charges for its services and decisions in connection with the AMLA. These charges are tailored according to time expenditure and the interests of those bound to pay the charges. The basis for these calculations is the Ordinance on the Supervision Tax and Charges Levied by the Anti-Money Laundering Control Authority (ChO AMLCA).
The costs incurred by the AMLCA that cannot be allocated individually, are covered by a supervisory fee introduced in 2006, levied on all SROs and financial intermediaries directly subordinate to the AMLCA, in addition to the charges. The tax amount is determined annually and calculated on the basis of the difference between the AMLCA's total supervision expenditure, minus total income from charges, arising from the previous year.
Last update: 01.03.2007