I. Purpose and system of the provision

1 The purpose of the provision is to apply the risk-based approach in a more specific manner. It is intended to provide assistance and to describe circumstances in which the risk of money laundering is so low that compliance with the full due diligence requirements (Art. 3–7 AMLA) would not be justified. The regulation is intended to serve as a de minimis clause applicable to long-term relationships, in addition to that for cash transactions (Art. 3 para. 2 AMLA). It should be noted that this de minimis clause is not aimed at subjecting a financial intermediary as such, but merely at waiving compliance with individual due diligence requirements.

2 The concretization of the conditions of the standard by means of the terms “assets of little value” and “no suspicion of possible money laundering or terrorist financing” was carried out in Art. 11 AMLO-FINMA. The fact that this regulation is at the ordinance level means that it is quicker and easier to adapt the definitions and the cases in which they apply, which is an important aspect of promoting innovation in the Swiss financial center. Products in the areas of payment systems, platforms, e-money and virtual asset service providers (VASPs) are particularly fast-moving, which requires flexibility and dynamism on the part of the regulator and the supervisory instruments. FINMA assesses specific applications from financial intermediaries with a particular business model and associated risk profile to determine whether they qualify for a waiver of due diligence requirements in accordance with Article 7a AMLA (Article 11 para. 5 GwV-FINMA). If the financial intermediary is subject to a self-regulatory organization (SRO) rather than FINMA, the application for a potential exemption from the due diligence requirements is submitted to the responsible SRO for final review by FINMA.

3 While Art. 11 AMLO-FINMA, which is based on Art. 7a of the AMLA, governs the waiver of the performance of individual due diligence requirements, a related norm exists in Art. 12 AMLO-FINMA. This regulates a special case of simplified due diligence requirements, which has its origin in a letter from the Anti-Money Laundering Control Authority dated 9.10.2003, in which the Control Authority granted such exceptions. The Association of Swiss Credit Banks and Financial Institutions requested that FINMA also apply these simplifications to the area of consumer credit, which it confirmed in a letter dated June 15, 2011. This practice was then incorporated into Art. 12 GwV-FINMA.

II. History

4 The standard was introduced with the Federal Act of October 3, 2008 on the Implementation of the Revised FATF Recommendations and entered into force on February 1, 2009. The aim of the introduction of this provision was to grant “administrative relief” as a counterweight to the stricter due diligence requirements that were introduced at the same time.

III. International law

A. FATF Recommendations

5 The FATF Recommendations, on the basis of which the provision of Art. 7a AMLA was issued, allow countries not to apply certain obligations to specific institutions or to narrowly defined forms of business activity if these can be shown to have a low risk of money laundering. The FATF Recommendations specify the risk-based approach to the identification of the contracting partner by identifying risk-increasing and risk-reducing circumstances. In its guidance, the FATF also provides specific information and a risk matrix that show how the risk-based approach can be implemented in the area of electronic card, mobile and internet payments. Some of the criteria mentioned therein can be found in Article 11 GwV-FINMA.

B. European Union Anti-Money Laundering Directive

6 There is an analogous exemption provision in the EU. Article 15 of Directive 2015/849/EU, as amended by Directive (EU) 2018/843, stipulates that in certain areas where there is only a low risk, a member state may provide for simplified due diligence. At the same time, para. 3 of this provision clarifies that transactions and business relationships must be monitored to a sufficient extent to enable the detection of unusual or suspicious transactions, even when simplified due diligence procedures are applied. According to the proposal for the new regulation to combat money laundering and terrorist financing, an authority for combating money laundering and terrorist financing (“AMLA”) is to issue so-called “technical regulatory standards” that describe the obligations for conducting due diligence with regard to customers. These regulatory standards should also include specific simplified due diligence requirements that can be applied when there is a low risk.

IV. Basic definition

A. General requirements

7 Art. 7a AMLA defines the conditions under which a business relationship can be considered non-critical, with the consequence that compliance with the due diligence requirements (Art. 3–7 AMLA) may be waived. To this end, the two conditions set out below must be met cumulatively.

B. Assets of small value

8 The law does not specify the maximum amount below which assets may be classified as “low-value assets”. Rather, this is to be determined in the context of the envisaged business model and in particular with regard to how exposed such a business model is to possible money laundering or terrorist financing. In order to set certain guidelines nonetheless, FINMA was instructed to create various case groups of financial intermediaries and financial products or services within the framework of GwV-FINMA and to set thresholds for these case groups, taking into account the anticipated money laundering risks (see no. V. below).

C. No suspicion of money laundering or terrorist financing

9 The cumulative requirement of the exclusion of suspicions of possible money laundering or terrorist financing is paradoxical in that the very purpose of the due diligence requirements – from which exemption is granted – is to be able to identify suspicious facts. This contradiction is already addressed in the explanatory report, which clarifies that the waiver of due diligence requirements should only apply to products and services that pose a low to very low risk of money laundering. This specification is consistently supported in the doctrine. In the list of cases in Article 11 AMLO-FINMA, FINMA specifically names products and services that pose a low or very low risk of money laundering, which is why it can be assumed that there are no grounds for suspicion without further audit procedures being required for this determination.

V. Art. 11 GwV-FINMA

10 The legislator (FINMA) has been commissioned by the Federal Council to selectively designate areas that it releases from compliance with due diligence requirements if, in connection with a specific threshold, they show a low or very low risk of money laundering. With this approach of identifying and defining case groups, Switzerland is following the FATF's approach.

11 The authors believe that the list of case groups in Article 11 AMLO-FINMA, which has existed since 2008 and has remained almost unchanged since then, should be updated and expanded, given that not only the needs of financial intermediaries and their customers and thus the business models have changed in the meantime, but also that case law has developed further. However, the most important drivers for a revision are likely to be the new technological conditions and possibilities that have arisen as a result of the digitalization push in the financial services sector. Finally, the case groups should also be adapted to the changed circumstances because it is important to ensure that these constellations actually pose a low risk of money laundering. For example, the risk can be very significant in the case of payment systems or the transfer of cryptocurrencies that allow a transfer of value abroad, while those with restrictions on local transfers (e.g. vouchers for department stores; payment system in a ski resort, etc.) show a lower risk.

A. Payment instruments for cashless payment transactions that are used exclusively to pay for goods and services (Art. 11 para. 1 AMLO-FINMA)

12 The restriction to the “payment of goods and services” is to be interpreted restrictively, since the legislator of the ordinance thus means only goods and services from commercial traders and service providers. Payments between private individuals do not fall under para. 1, even if the reason for the payment lies in the purchase of goods and services (e.g. via internet auction houses).

13 In addition, systems that allow value transfers without the purchase of goods should not be exempted from compliance with due diligence requirements, as FINMA sees an inherent risk of money laundering in these constellations. Furthermore, it should be noted that all the amounts defined in para. 1 are explicitly to be understood as so-called “spending limits”. This means that it is not the amount made available (e.g. card limit) that is decisive for the threshold value, but the amount that the user of the means of payment can actually spend or pay. If the means of payment allows “overpayment”, then this amount is to be included in the threshold. This requires that the financial intermediary must have the technical means to detect the exceeding of the threshold values (Art. 11 para. 4 AMLO-FINMA).

14 The legislator has defined the following subcategories, which are part of cashless payment transactions for the exclusive payment of goods and services:

1. e-money (lit. a)

15 There is no precise definition of the terms e-money or e-commerce; however, they are generally understood to mean electronic means of payment for everyday use and in particular for use on the internet. From the point of view of the legislator, it is irrelevant whether the electronically available money is stored on a server and the customer accesses and uses it by means of virtual access (e.g. to a wallet) or whether the amount is debited from a local chip system. Traditionally, these are so-called prepaid systems.

16 In addition to the criteria in para. 1, the following conditions must be cumulatively fulfilled (lit. a):

• No more than CHF 1,000 per transaction and CHF 5,000 per calendar year and contracting party may be paid;

• any repayments of the means of payment are made only in favor of accounts held with banks authorized in Switzerland or subject to equivalent supervision abroad and in the name of the contracting party; and

• the amount of CHF 1,000 may not be exceeded per repayment.

17 By allowing for the possibility of repayment, the legislator wanted to prevent unfair business models from being favored and customers from being subjected to pressure to buy. Nevertheless, in order to keep the risk of money laundering low, the repayments must be transferred to the same bank account from which the transfers originally originated. If this is not possible in individual cases (e.g. due to the balance of this account having been cleared in the meantime), then the financial intermediary must ensure that the amount is at least transferred to an account in the name of the same contractual partner. If, in individual cases, the amount has to be transferred back to a different account, then this circumstance is irrelevant for the calculation of the limit, as it is ultimately the same contractual partner.

2. Payments may only be made to Swiss merchants (lit. b)

18 In addition to the criteria in para. 1, the following conditions must be cumulatively fulfilled (lit. b):

• No more than CHF 5,000 per month and CHF 25,000 per calendar year and contractual partner may be

• to merchants in Switzerland;

• whereby charges are made exclusively to and any repayments of the means of payment are made exclusively to an account in the name of the contracting party with a bank authorized in Switzerland.

19 The higher thresholds seem justified insofar as in this constellation payments can only be made to Swiss merchants. Since this is not feasible in practice (it would be necessary to monitor merchants in real time with regard to their Swiss domicile), doctrine correctly states that this use case can only be realized if the circle of providers and service providers is limited (so-called “closed-loop systems” within the meaning of lit. c below).

3. Closed-loop systems (lit. c)

20 This primarily concerns store cards or the issuing of cards that are accepted within a clearly defined group of customers (e.g. merchants belonging to the same group).

21 In addition to the criteria in para. 1, the following conditions must be cumulatively met (lit. c):

• The means of payment can only be used within a specific network of service providers or suppliers; from the term “service provider” it can be inferred that the service provider pursues a commercial activity, in contrast to paragraph 2, which is intended to regulate payments between private individuals; and

• the turnover does not exceed CHF 5,000 per month and CHF 25,000 per calendar year and contractual party.

B. Payment instruments for cashless payment transactions that are not used exclusively to pay for goods and services (Art. 11 para. 2 AMLO-FINMA)

22 Under paragraph 2, it is not a requirement that the means of payment is used exclusively for the cashless payment of goods and services. To this end, the thresholds have been reduced to a maximum of CHF 250 per data carrier or per transaction and CHF 1,500 per contracting party. This should allow very small amounts to be transferred between private individuals (P2P) without having to observe the due diligence requirements. The provisions on charges or repayments to an account held in the name of the contracting party at a Swiss bank in accordance with Art. 11 para. 1 lit. b AMLO-FINMA also apply here (see N. 18).

C. Non-rechargeable means of payment (Art. 11 para. 3 AMLO-FINMA)

23 In para. 3, the criterion of a long-term business relationship was deliberately omitted. Instead, the following conditions apply here, which justify a waiver of the duty to comply with the due diligence requirements:

• the means of payment cannot be recharged;

• the credit balance serves exclusively to pay electronically for goods and services purchased by the contracting party;

• no more than CHF 250 is made available per data carrier; and

• no more than CHF 1,500 is made available per transaction and per contracting party.

24 In this regard, FINMA shall apply the criteria for assessing related transactions in line with those of the cash transaction.

D. Monitoring of the threshold values (Art. 11 para. 4 AMLO-FINMA)

25 The financial intermediary may dispense with compliance with the duties of due diligence under the following cumulative conditions:

• He must have technical facilities sufficient to detect any exceeding of the respective threshold values.

• It must take precautions to prevent any accumulation of the amount limits and violations of the provisions of Art. 11 AMLO-FINMA.

• Articles 14 and 20 AMLO-FINMA remain reserved with regard to the monitoring of transactions. Article 10 AMLO-FINMA also remains reserved, insofar as it is applicable. The obligations mentioned in the reserved provisions must therefore continue to be observed despite the waiver of the due diligence obligations.

26 It should be noted first of all that, contrary to the wording of the provision, the legislator not only requires that the exceeding of the respective thresholds be detected, but that the financial intermediary should also ensure that the exceeding of the thresholds is technically prevented. “It should be technically impossible to pay more than the set amount at once. Likewise, a possible accumulation of the amount limits should be prevented (prohibition of smurfing).” It is precisely this technical monitoring and the automatic blocking in the event of a threshold being reached, with or without an accumulation of the amount limits, that are not easy to implement in practice, especially since the contracting parties are not identified in the sense of Art. 3-7 AMLA. In this respect, it is advisable for financial intermediaries to identify the contracting parties by other means; otherwise, it would be impossible to attribute the amounts and thus monitor the thresholds. This includes, in particular, the registration of personal data such as surname, first name, date of birth, address, e-mail address, mobile phone number and IBAN (in the name of the contracting party). Even if this information does not offer an absolute guarantee, it does allow the financial intermediary to carry out certain automated checks, such as comparisons with address databases and databases specifically maintained for the purposes of a “name check”, and thus verify the accuracy of the information.

27 Client-identifying information is also necessary to carry out meaningful transaction monitoring within the meaning of Art. 14 in conjunction with Art. 20 AMLO-FINMA and to identify transactions with increased risks, because these obligations must also be observed when applying the exception in Art. 7a AMLA due to the clarification in Art. 11 para. 4 AMLO-FINMA. Identifying customers with increased risks, particularly PEPs, is another duty that cannot be fulfilled without a “Name Check” comparison and, consequently, without the necessary customer-identifying information.

28 In conclusion, it should be noted that it was not the intention of the legislator to use this para. 4 to immediately undermine the simplifications under Art. 11 AMLO-FINMA. Instead, financial intermediaries are required to ensure appropriate and risk-based monitoring. It is recommended that financial intermediaries regularly validate the risks as part of their AMLA risk analysis in accordance with Art. 25 para. 2 AMLO-FINMA and adjust the measures if necessary.

E. Finance leasing (Art. 11 para. 4^bis AMLO-FINMA)

29 In the case of a finance lease, there is a three-way system in which the lessor acts as the pre-financing and thus lending party, which ultimately leads to its subordination requirement under Article 2 para. 3 let. a AMLA. The lessor acquires the leased asset from the manufacturer or dealer for its own account and in its own name, but it does so at the instruction of the lessee (e.g. specification of the vehicle). Under the leasing contract, the lessor then provides the lessee with the leased property for an agreed (typically non-terminable) contract term, for which the lessee pays a so-called leasing installment. When the leasing contract ends, the leased property is either returned to the leasing company, the contract is extended, a new contract is concluded or the leased property is purchased by the lessee.

30 Because of the long or even non-terminable contract periods, the leasing business per se only poses a low risk of money laundering. This risk assessment was also confirmed in the National Risk Assessment Report of the interdepartmental coordinating group on combating money laundering and the financing of terrorism (CGMF) of 2015.

31 Pursuant to Article 11 para. 4^bis AMLO-FINMA, the financial intermediary may waive the duty of diligence

• if the leasing contract is a finance lease and

• the annual leasing installments to be paid, including VAT, do not exceed CHF 5,000.

32 Although the ordinance and the materials are silent on whether the amount of CHF 5,000 can be cumulated for several leasing contracts from the same lessee, this is clearly to be denied in practice due to the analogous application of Art. 11 para. 4 AMLO-FINMA. A systematic interpretation of Art. 11 GwV-FINMA and its materials also leads to the same conclusion, because the legislator already speaks out against increasing the threshold due to the cumulation of individual limits in its explanations on e-money.

33 The cases of application of Art. 11 para. 4^bis AMLO-FINMA are of minor importance in practice because the leasing installments usually exceed the amount of CHF 5,000 anyway, and, should this not be the case in exceptional cases, the costs of implementing a separate process for the leasing companies would be greater than the savings from the simplifications. In this respect, the exemption is likely to be relevant only for those leasing companies that focus primarily on small contracts with installments of less than CHF 5,000.

F. Further exemptions (Art. 11 para. 5 GwV-FINMA)

34 This provision allows FINMA to exempt further business areas or products from the due diligence requirements in individual cases, as needed and taking into account changes in circumstances over time, upon request. The prerequisite for this is that the financial intermediary or SRO making the request is able to demonstrate that the business relationship is of a lasting nature and that the risk of money laundering is low to very low as defined in Article 7a AMLA.

VI. Legal effect of the exceptions

35 A financial intermediary who operates in the area of exceptions may dispense with the duty to exercise due diligence (Art. 3–7 AMLA). Nevertheless, the financial intermediary remains subject to the law. This is apparent, for example, in the duty to comply with organizational measures (Art. 8 AMLA) and the duty to report (Art. 9 AMLA). It should be noted that the documentation requirement also continues to apply, even though Art. 7 AMLA, which governs the documentation requirement, would actually be among the excluded obligations. A complete waiver of compliance with the due diligence requirements would not be permissible under the FATF recommendations. Furthermore, Art. 11 para. 4 AMLO-FINMA clarifies that Art. 14 and Art. 20 AMLO-FINMA on the monitoring of transactions and, where applicable, Art. 10 AMLO-FINMA must also be complied with when applying the simplified due diligence measures within the meaning of Art. 7a AMLA.

Bibliography

Jutzi, Thomas, in: Kunz, Peter V./Jutzi, Thomas/Schären, Simon (Hrsg.), Geldwäschereigesetz, Stämpflis Handkommentar, Bern 2017.

Müller, Thomas/Nagel, Thomas, in: Hsu, Peter Ch./Flühmann, Daniel (Hrsg.), Basler Kommentar zum Geldwäschereigesetz, Basel 2021.

Wyss, Ralph, in: Thelesklaf, Daniel/Wyss, Ralph/Zollinger, Dave/van Thiel, Mark (Hrsg.), GwG Kommentar, 3. Aufl., Zürich 2019.

Materials

Anhörungsbericht zur Geldwäschereiverordnung-FINMA vom 3.6.2015, abrufbar unter https://www.finma.ch/de/~/media/finma/dokumente/dokumentencenter/anhoerungen/abgeschlossene-anhoerungen/gwv-finma-revision/ab_gwv_finma_20150603_de.pdf?sc_lang=de&hash=D5FF3F2FA92310BDB3F0CEA40B231191, zuletzt besucht am 20.1.2025 (zit. Anhörungsbericht GwV-FINMA 2015).

Bericht über die nationale Beurteilung der Geldwäscherei- und Terrorismusfinanzierungsrisiken in der Schweiz, Juni 2015, abrufbar unter https://www.newsd.admin.ch/newsd/message/attachments/42572.pdf, zuletzt besucht am 25.1.2025.

Botschaft zur Umsetzung der revidierten Empfehlungen der Groupe d’action financière (GAFI) vom 15.6.2007, BBl 2007 6269, abrufbar unter https://www.fedlex.admin.ch/eli/fga/2007/938/de, zuletzt besucht am 20.1.2025 (zit. Botschaft GAFI 2007).

Erläuterungsbericht zur Geldwäschereiverordnung-FINMA (GwV-FINMA) vom 8.6.2010, abrufbar unter https://www.finma.ch/de/~/media/finma/importiertedokumente/regulierung/anhoerungen/25-zusammenfuerung-gwv/erlaeuterungsbericht-geldwaeschereiverordnung-finma-20100611-de.pdf?sc_lang=de&hash=33AB93C142CA19582D12724D253BF229, zuletzt besucht am 20.1.2025 (zit. Erläuterungsbericht GwV-FINMA 2010).

FATF-Empfehlungen 2012 (updated November 2023), abrufbar unter: https://www.fatf-gafi.org/content/dam/fatfgafi/recommendations/FATF%20Recommendations%202012.pdf.coredownload.inline.pdf, zuletzt besucht am 20.1.2025.

FATF Guidance for a Risk-Based Approach to Prepaid Cards, Mobile Payments and Internet-Based Payment Services, June 2013, abrufbar unter: https://www.fatfgafi.org/en/publications/Fatfrecommendations/Rba-npps-2013.html, besucht am 20.1.2025.