Annual Report 2024: Money Laundering Reports Rise, Quality Remains Critical

Key findings from the MROS report

• 72.5% of SARs were made on the basis of the statutory reporting duty (Art. 9 AMLA), 21.7% on the basis of the right to report (Art. 305ter para. 2 Swiss Criminal Code).
• In 5.6% of cases, negotiations to establish a business relationship were terminated due to a reasonable suspicion.
• Suspicions most frequently arise through transaction monitoring or external sources of information.
• In just under 60% of SARs, fraud was cited as a suspected predicate offence.
• MROS forwarded 1,043 reports to the prosecution authorities, which corresponds to an increase of 20.4%.
• The prosecution authorities reported 82 penalty orders, 48 judgments and 262 no-proceedings orders or rulings abandoning proceedings in connection with SARs to MROS.

MROS notes that despite the increasing number of SARs, they are often insufficiently clarified or superficial; evidence for special investigations in accordance with Art. 6 AMLA is often lacking.

What clarification duties apply to financial intermediaries?

The due diligence duties set out in the AMLA are structured in a cascade and are also of central importance for reporting. At the core are Art. 3 to Art. 5 AMLA which contain provisions on verifying the identity of the customer; establishing the identity of the beneficial owner; and periodic repetition of these obligations. The special clarification duties in Art. 6 AMLA provide for a risk-based examination of the economic background and the purpose of a transaction or of a business relationship. Financial intermediaries must follow up and clarify facts and suspicious circumstances. If these clarifications are unsuccessful or if the suspicions cannot be dispelled, a suspicious activity report must be submitted to MROS.

Quality vs. speed – what does MROS expect?

Art. 9 para. 1 AMLA requires any SARs to be filed immediately. Accordingly, financial intermediaries should endeavour to submit a report as quickly as possible in order to comply with regulatory requirements and exclude criminal liability. That said, SARs and the clarifications on which they are based should be of a certain quality so that MROS can process them effectively. Accordingly, MROS points out in its annual report that financial intermediaries may take the time needed to thoroughly clarify the situation. MROS acknowledges that financial intermediaries need a certain amount of leeway in their choice of clarification methods and in the time required for such clarification. For this reason, the correct or appropriate length of time that clarifications may take cannot be determined schematically. Each individual case depends on the level of risk, the specific circumstances and the complexity of the business relationship.

How detailed should internal documentation and suspicious activity reports be?

Financial intermediaries should record every decision to report – or not to report – suspicious activity in an internal memo that clearly documents the timeline, the clarifications carried out and the resulting findings, as well as the reasons for reporting or not reporting.

Extensive clarifications and detailed internal documentation provide the basis for a high-quality suspicious activity report. According to MROS, financial intermediaries must clarify the situation to such an extent that they can form a well-founded opinion. The completeness of the SARs is just as important as sufficient depth of clarification. MROS continues to receive numerous reports with insufficient or incomplete data, meaning that they have to be returned to the financial intermediaries for correction.

Summary: High-quality suspicious activity reports are key to effectively combating money laundering

The MROS annual report once again shows a significant increase in the number of SARs. However, it is not just about communicating the latest statistics. The annual report is also a clear call to improve the quality of SARs. These, and the investigations on which they are based, must be of a certain quality so that MROS can process and analyse them appropriately.

In order to comply with the regulatory requirements, financial intermediaries should clarify the facts in detail and adequately document their decisions on whether or not to submit a suspicious activity report. These considerations are the basis for submitting high-quality SARs with sufficient content.