Swiss-Bearer Shares Remain Safe For Now

The implementation of the joint FATF and OECD plans to tackle money laundering in Switzerland continue to experience opposition from many quarters. Most vociferously, there has been widespread criticism from business and political parties of its plan to abolish so-called “bearer shares” and seize those not exchanged before the deadline.
 

Full Compliance and Opposition

The objective of the Swiss federal government is to achieve full compliance ahead of the next review during the summer of 2018. If it does not achieve this, Switzerland will remain on Europe’s “Grey List” as measures for tax transparency tighten up. There is a greater concern that the country will end up on the “Black List” of countries deemed non-cooperative if things do not improve.

The draft bill published at the end of April met with fierce resistance. Three of the country’s four major parties oppose it with one major law firm saying it goes way beyond recommendations, which is concerning. Others are concerned that businesses operating in Switzerland are being compelled to open Swiss bank accounts – something that the law firm and political parties say stand against the country’s philosophy on economic freedom.

Why This is Happening: 2016 Findings and 2018 Fallout

OECD’s Global Transparency Forum examination in July 2016 was quickly followed up in December of that year by FATF. Both concluded that the country’s laws used to determine beneficial owners were not sufficient in the modern world. Fast forward to January of this year when Switzerland’s Federal Council tabled its initial bill in response to this finding.
 

• The first part aimed to force the conversion of all Bearer Shares to Registered Shares
• Sanctions against those who fail to report beneficial owners and companies failing in their duty to keep records of beneficial owners and shareholders

 
Companies not listed within Switzerland can no longer issue such Bearer Shares. Any still held and not reported to the company that issued it within 18 months are to be seized. This follows on from Switzerland’s previous tightened restrictions on Bearer Shares.
 

An Ongoing Process

At the beginning of June, a second consultation paper hit publication. It was designed, according to its commissions and writers, to address the flaws pointed out from the first. Amongst them included a strong recommendation of the introduction of a “due diligence” process on services concerned with establishing and managing entities outside of Switzerland.
 
This process is ongoing and is expected to remain open until September 21st.