Switzerland’s Financial Market Supervisory Authority (FINMA) conducted an in-depth review of the money laundering risk analyses of over 30 Swiss banks during the spring of this year and found that many did not meet the basic requirements for such an analysis. The Swiss watchdog in a statement explained that it was prompted to conduct a deeper examination after it “repeatedly identified shortcomings” in the measure among banking institutions during its on-site supervisory reviews.

FINMA Releases Guidance

In some cases, FINMA found the lack of an adequate definition of money laundering risk tolerance, which forms the limiting framework of a robust risk analysis. The regulator also found “a lack of various structural elements that are prerequisites for a risk analysis.”

To tackle the shortcomings it found that FINMA had released guidance on money laundering risk analysis today (Thursday). It noted that the guidance set out its observations and is aimed at creating transparency about them.

“The money laundering risk analysis is an important tool for the strategic management of banks and other financial intermediaries,” FINMA explained. “[Banks] use this to identify and mitigate the risks in the area of money laundering and determine the relevant risk criteria for the financial institution’s activities."

Additionally, FINMA explained money laundering risk analysis stipulates that money laundering risks are not within an institution's risk tolerance.

Important Criteria

According to FINMA, under the Swiss Anti-Money Laundering Ordinance, Swiss banks must conduct a money laundering risk assessment that considers both their business operations and the characteristics of their established business relationships. Based on these evaluations, banks are obligated to ascertain the implications for their own business activities.

The ordinance also requires Swiss lenders to “periodically explicitly prepare" a corresponding risk analysis at a "consolidated level," FINMA noted, adding that the Swiss Banking Act and the Swiss Anti-Money Laundering Act (AMLA) in addition to the ordinance require banks to capture, limit and monitor their risks as part of their organizational requirements.

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