Money Laundering Law: Now Applicable for cash transactions
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With the new rules cash transactions of over CHF 100‘000 as well as virtual currencies, which replace money in the internet are amenable to the MLL.
Dealers that accept cash payments of over CHF 100‘000 are subject to the same due diligence obligations as financial intermediaries, when it come to the acceptance of funds. Therefore especially car-, gemstone-, precious metal-, property- and art dealers as well as auction houses are subject to this new regulations.
The due diligence obligations applicable in cases of cash transactions above CHF 100‘000 ask for a clear and unequivocal identification of the contractual party with name, first name, date of birth, address and require the respective documentation. The latter means that the documents associated with the transactions have to be prepared in a way so that a qualified third party can form an opinion about the transaction as well as the business relation. Furthermore the beneficial owner (the person who will own the gem, artwork, car etc.) has to be clearly identified as well. This is also applicable if the purchase is paid in several instalments. Not the singular payment but the total volume of the transaction is decisive.
Does a transaction seem unusual or odd to the dealer or are there any indications that the funds could stem from crimes or tax offences or that the funds could belong to a criminal organisation the he has to do intensified testing concerning the purpose of the respective transaction.
If the intensified testing done in relation to the due diligence obligations lead to the suspicion that a case of money laundering is possible the case has to be reported immediately to the office of money laundering (MROS).
Contrary to financial intermediaries, dealers do not need an authorisation if they do transactions of over CHF 100’000 in cash. But they are obliged to have an auditor who qualifies under the articles 5 and 6 of the Swiss audit law, who checks and confirms that they have fulfilled their due diligence obligations.
If a dealer disobeys the new regulations of the MLL by not carrying out the necessary due diligence actions and documentation requirements and does not identify the other party and the beneficial owner properly he has to consider extremely high penalties. An omission of the due diligence obligation is usually considered as being intentional and can cause penalties up to CHF 500’000 (if considered as negligence up to CHF 150’000). Already the omission of the obligation to have the transactions audited can lead to penalties of up to CHF 100’000 (if considered as negligence up to CHF 10’000).
Due to the fact that very expensive consequences could result it is worth to do the necessary clarifications. Best if you arrange an individual appointment with our MLL Expert Heinz Klauz.
