MROS mandatory reporting practice (Article 9 Money Laundering Act MLA) with respect to the Federal Council’s emergency regulations on sanctions against certain persons from Tunisia, Egypt, etc.)
The Federal Council has issued the following regulations based on emergency law (Article 184 paragraph 3 of the Federal Constitution; SR 101):
- Regulation of 2 February 2011 on measures against certain persons from the Arab Republic of Egypt (SR 9220.127.116.11)
- Regulation of 19 January 2011 on measures against certain persons from the Republic of Tunisia (SR 918.104.22.168)
Under these regulations financial intermediaries are required to report to the Directorate of Public International Law at the Federal Department of Foreign Affairs (DFA) any business connections with certain persons from the Arab Republic of Egypt and the Republic of Tunisia and to freeze their respective assets.
In connection with these regulations, the Swiss Financial Market Supervisory Authority (FINMA) published the following statement on its website: Submitting a report to the Directorate of Public International Law under the emergency regulations does not discharge financial intermediaries from their duty to submit a report immediately to the Money Laundering Reporting Office Switzerland (MROS) under Article 9 of the Money Laundering Act."
MROS would like to take this opportunity of explaining how this statement should be construed, i.e. when mandatory reporting under Art. 9 MLA (SR 955.0) should be applied:
- Financial intermediaries are required to report to the Directorate for Public International Law any person, business or organisation listed in the annex to the regulations and to freeze the corresponding assets. This takes place irrespective of submitting a report to MROS. The financial intermediary is not obliged by law to send MROS a copy of the report submitted to the Directorate.
- Financial intermediaries who submit a report to the Directorate for Public International Law are required under Article 6 paragraph 2 letter b of the Money Laundering Act to carry out a special examination of the reported business connection. If, after special examination, no further suspicious facts are established other than the naming of the person, business or organisation in the annex to the regulations, then a well-founded suspicion does not exist.
- If, however, further factors (other than merely being listed in the annex to the regulation) arouse a well-founded suspicion of the person, business or organisation, then financial intermediaries must submit a report to MROS under their duty to report according to Article 9 of the Money Laundering Act. Factors arousing a well-founded suspicion may include, for example, criminal proceedings in Switzerland or abroad that are in progress against such natural or legal persons, entities or bodies (see Council Regulation (EU) No 101/2011 of 4 February 2001 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Tunisia and the grounds listed in Annex I of the said regulation), requests for mutual assistance, implausible transaction patterns or suspense accounts, et cetera.
- If financial intermediaries harbour a basic suspicion, they may make use of their right to report to MROS (voluntary reporting) under Article 305ter paragraph 2 of the Swiss Criminal Code.
- At the same time as submitting a mandatory report under Article 9 of the Money Laundering Act, the financial intermediary is required to freeze the corresponding assets according to Article 10 of the Money Laundering Act. This may appear not to be necessary in view of the blocking of assets already implemented under the Federal Council regulation. However, it is essential that the financial intermediary do this because the assets must be frozen under different legal bases. If, for example, the person reported were removed from the list in the Federal Council regulation, the associated freezing of assets would be lifted. If, however, a well-founded suspicion persisted and a report had been submitted to MROS under Article 9 of the Money Laundering Act, the assets would have to remain legally frozen for five working days (Art. 10 MLA).