Money laundering supervision: findings from the on-site supervisory reviews (2024)

After publishing its guidance on money laundering risk analysis in August 2023, FINMA conducted a review of the money laundering risk analyses of various banks during the course of 2024. This revealed, on the one hand, that money laundering risk analysis has grown in relevance as an instrument for ensuring that the risk tolerance is observed. On the other hand, it revealed that an adequate definition of the risk tolerance was often still lacking. In some cases, it had not been defined on the basis of the actual risks arising from the individual business model. Furthermore, express exclusions of specific countries, client segments, services or products had also not been made in some cases.

On-site supervisory reviews revealed that the time periods for analysing any suspicious activities (alerts) identified during the course of the transaction monitoring processes were still too long in many cases. The banks concerned are thus putting themselves at risk of violating their duty to file a report with the Money Laundering Reporting Office Switzerland (MROS).

At some supervised institutions, the transaction monitoring system lacked a combination of static and dynamic criteria or scenarios. On several occasions, this resulted in failures to identify suspicious transactions, coupled with a large number of false-positive alerts being generated. In the case of cash transactions in particular, FINMA found that the scenarios for monitoring these transactions in the transaction monitoring system were lacking, or were ill-suited for identifying obviously suspicious cash transactions or pass-through transactions.

Lastly, FINMA found that, in several cases, the institutions were failing to carry out a sufficiently thorough critical evaluation as to the plausibility of higher-risk transactions. More specifically, cash transactions were found to have very superficial justifications (“customary”, “wage payment”, “supplier payment”) that were clearly inadequate to allow for a sound examination as to whether the funds could potentially be intended for illegitimate purposes.

Ultimately, the on-site supervisory reviews conducted revealed a potential for improvement in relation to the establishment of criteria for business relationships or transactions with increased risks (BRwiR/TwiR). FINMA expects the institutions to adapt the criteria for BRwiR and TwiR to their specific risks and establish a feedback link between TwiR and BRwiR. In this respect, a large volume of TwiR should indicate that a business relationship could be a BRwiR and, conversely, adapted TwiR criteria could be applied to BRwiR..

(From the Annual Report 2024)