The coronavirus still has a firm grip on the world and makes our everyday life considerably more difficult. FINMA takes this situation into account on an ongoing basis and has already issued three supervisory notices in connection with COVID-19, in which it provides for relief for supervised financial institutions.

Such facilitation concerns, among other things, the provisions on combating money laundering. In its supervisory notice 03/2020 of 7 April 2020, FINMA makes use of the possibility of allowing facilitations in the application of due diligence obligations. The simplifications specifically relate to the provisions on the identification of clients when opening a new business relationship and apply to all openings until 1 July 2020.

 

Applicable regulations

In accordance with the applicable provisions of the CDB20, the identification of contracting partners or similar persons involved in the account opening must be carried out using copies of identification documents which have either been inspected by the client advisor (so-called “original seen”) or authenticated by a notary public. In exceptional cases the CDB20 permits the use of an account, if only individual documents or details are either missing or not available in due form. However, this requires that sufficient information on the account holder and the beneficial owner or controlling person is available and that the exception is not intended to impair the normal course of business. However, all necessary information and documents must be available no later than 30 days after opening the account.

 

Application of the derogation

In view of the currently restricted freedom of movement and infrastructure, compliance with these regulations is difficult for many financial institutions – especially if they do not (yet) offer the opportunity to open accounts via online channels. FINMA has also recognized this, and in its supervisory notification it specifies accordingly that the COVID-19 pandemic must be regarded as an exceptional situation and the application of the exception is therefore justified in principle for copies of identity documents in order not to impair the normal course of business. In particular, this means that a customer relationship may be opened on the basis of a simple copy of an identification document, i.e. without confirmation of authenticity by the client advisor or notary public. The deadline for obtaining the missing confirmation of authenticity is simultaneously extended from currently 30 days to 90 days.

 

Business relationships with increased risks

The facilitations for client identification in the context of new openings apply without restriction to business relationships including normal risks. For business relationships including enhanced risks, however, FINMA states that each individual case must continue to be considered and the derogation may only be applied if the enhanced money laundering risks associated with the business relationship are acceptable. The decision on the application of the derogation when opening business relationships involving enhanced risks must further be documented.

 

SRO supervisors

The facilitations primarily apply to financial institutions subject to the CDB. However, self-regulatory organizations may provide for similar relief for their members.

 

 

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Debora Frei
Compliance Officer Aquila