Enforcement proceedings due to shortcomings in consolidated supervision in the area of combating money laundering (2022)

In the year under review, FINMA concluded two proceedings that focused on the requirements to combat money laundering and terrorist financing in relation to a financial group.

According to these requirements, a Swiss financial intermediary as the parent company of an international financial group is required, among other things, to be able to ensure that all group companies comply with the basic principles of the Anti-Money Laundering Act in a consolidated manner – regardless of a foreign domiciled subsidiary. The parent company must also monitor the legal and reputational risks associated with money laundering and terrorist financing globally across the entire financial group. These requirements are designed to prevent global financial intermediaries from circumventing Swiss anti-money laundering standards by establishing business relationships in foreign subsidiaries that are subject to less stringent supervisory rules.

Specifically, in one of the two proceedings, FINMA found that the parent company of a Swiss bank did not meet the group-wide requirements to combat money laundering and terrorist financing and did not implement the relevant internal guidelines at group level. FINMA therefore ordered the bank in question to take measures that went beyond the corrective organisational and operational measures already taken by the bank itself. In particular, it ordered measures to strengthen the parent company’s compliance department. In addition, FINMA requested that the parent company issue a group-wide directive concerning the commencement, monitoring and termination of business relationships. FINMA instructed it to make the basic principles of the Anti-Money Laundering Act mandatory for the entire financial group. The bank’s audit firm was tasked with monitoring the implementation of these measures. In addition, FINMA ordered an organisational measure in the form of a written declaration regarding the allocation of responsibilities. This declaration must include a complete list of the areas of responsibility of managers in a bank: each responsibility must be assigned to a person and every position must be filled (see ruling “Exigences incombant à une banque suisse à la tête d’un groupe financier”  of 20 May 2022).

The second proceeding concerned a Swiss insurance company which used a particular insurance product in its international business. The insurance company did not sufficiently take into account the increased money laundering and reputational risks of this insurance product in its internal directives and in its approach to the consolidated monitoring of money laundering risks. Due to these shortcomings, FINMA ordered appropriate measures to be taken to restore compliance with the law to the extent that the insurance company had not already taken these measures on its own initiative. FINMA will appoint an audit mandatary to review the implementation of these measures.

(From the Annual Report 2022)

Annual Report 2022

Updated: 28.03.2023 Size: 2.51  MB
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