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Swiss lawmakers push back on anti-money laundering law over competitiveness concerns

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  Published in Sports and Competition on Thursday, September 11th 2025 at 5:31 GMT by reuters.com
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Swiss Lawmakers Weigh the Trade‑off Between AML Compliance and Global Competitiveness

In a landmark session that drew the eyes of the global financial community, the Swiss National Council and the Council of States debated a sweeping overhaul of the country’s anti‑money‑laundering (AML) framework. The debate – held on September 11, 2025 – underscored the tension between a rigorous regulatory regime and the Swiss financial sector’s insistence that Switzerland remain a competitive, innovation‑friendly hub for private banking, wealth management, and emerging fintech.

The Core of the Proposal

At the heart of the proposal is an amendment to the Federal Act on the Prevention of Money Laundering and Terrorist Financing (the AML Act). The government has already announced a revised “AML‑2026” roadmap that would tighten due‑diligence requirements for high‑risk clients, expand data‑sharing obligations between financial institutions and the Swiss Financial Market Supervisory Authority (FINMA), and extend sanctions regimes to encompass non‑banking entities such as real‑estate firms and digital asset platforms.

The amendments would also introduce a “digital‑asset‑specific” AML regime, setting out clearer thresholds for “know‑your‑customer” (KYC) procedures in the crypto space. Under the new law, wallets holding more than 10,000 Swiss francs would be subject to mandatory reporting, and exchanges would be required to verify the identity of users in real‑time. The government argues that these steps will bring Switzerland into line with the European Union’s Fifth Anti‑Money Laundering Directive (5AMLD) and reduce the risk of the country becoming a haven for illicit funds.

Why the Pushback?

The Swiss financial sector – which accounts for roughly 3 % of the country’s GDP – has long relied on a reputation for discretion and efficiency. A 2024 study by the Swiss Bankers Association (SBA) found that Swiss banks generate approximately CHF 18 billion in fees from wealth‑management services for high‑net‑worth clients, many of whom seek privacy and protection from foreign regulatory regimes. The new AML provisions are feared to erode that advantage, potentially pushing clients to offshore jurisdictions that offer more lenient rules.

According to a statement released by the SBA on the day of the debate, the sector estimates that the proposed changes could cost the Swiss banking industry an additional CHF 1.2 billion in compliance expenditures over the next decade. The organization further cautions that the regulatory burden could deter fintech start‑ups, which have been instrumental in propelling Switzerland into the ranks of “crypto‑friendly” nations. An independent survey by the Swiss FinTech Association (SFTA) in July 2025 indicated that 72 % of surveyed fintech founders felt “overly burdened” by existing AML rules, a figure that rose to 85 % after the new amendments were announced.

The Political Divide

On the National Council side, the Green Party and the Social Democratic Party (SP) voiced strong support for the amendments, citing the growing threat of financial crime in a digital age. “We cannot afford to be complacent,” said SP MP Dr. Jana Keller. “The global financial system must be secure, and that security comes with the cost of stringent compliance.”

Opposition, however, was led by the Free Democratic Party (FDP) and the Swiss People’s Party (SVP), who argued that the reforms would stifle Swiss innovation and compromise the country’s unique positioning as a “fair‑play” jurisdiction. “The Swiss model is built on trust and discretion,” argued FDP MP Rolf Meier. “By imposing the same heavy-handed rules that we impose on the EU, we risk losing our competitive edge.”

The debate also brought to the fore Switzerland’s role in the global AML regime. In a related link within the Reuters article, FINMA’s 2025 Annual Report highlights the agency’s commitment to “cooperative oversight” while warning that “excessive alignment with EU directives could diminish the Swiss advantage in cross‑border transactions.” The report underscores the importance of balancing “international obligations with domestic priorities.”

International Reactions

The European Commission, which has been monitoring Swiss compliance with 5AMLD, welcomed the government’s proposal but urged for a phased implementation. “A gradual rollout will give Swiss institutions time to adjust without compromising the integrity of the EU market,” said a spokesperson from the Commission in a joint press release cited by Reuters.

Meanwhile, the United Nations Office on Drugs and Crime (UNODC) issued a brief statement noting that “the Swiss amendments align with the global trend toward tighter AML controls, but the international community must ensure that legitimate financial flows are not impeded.”

Potential Impact on Wealth Management and FinTech

One of the most significant concerns lies in how the new rules will affect wealth‑management practices. Swiss banks have traditionally employed a “soft‑KYC” approach, where only the most high‑risk clients undergo extensive verification. The new law would require “hard‑KYC” procedures for all clients with a net worth exceeding CHF 2 million, regardless of their country of origin. This shift could increase operational costs and delay service delivery.

In the fintech arena, the digital‑asset-specific regime could either spur or stifle innovation. On the one hand, clearer regulations could make it easier for legitimate crypto exchanges to operate in Switzerland, potentially attracting more capital. On the other, the mandatory real‑time identity verification could raise barriers for smaller exchanges that rely on anonymity to attract certain user demographics.

Looking Ahead

The Swiss parliament is scheduled to vote on the amendments in the next session, with a final decision expected by mid‑2026. In the meantime, industry players are bracing for a period of adjustment. The government has pledged to offer a “compliance support fund” to help institutions upgrade their systems, and FINMA is reportedly exploring the possibility of a sandbox regime to test new AML technologies before full implementation.

As the debate unfolds, the core question remains: can Switzerland maintain its long‑standing reputation as a global financial hub while meeting the rising demands for transparency and anti‑money‑laundering vigilance? The outcome of this legislative push will likely set a precedent for other nations grappling with the same tension between regulatory rigor and economic competitiveness.