The Swiss Federal Council has recently announced the launch of a consultation process effective until 29 November 2023 in order to tighten the existing anti-money laundering rules.
The proposed framework particularly focuses on the identification of legal entities, whereby a mandatory federal (transparency) register is set to be introduced containing information on beneficial owners. The non-public register will be coordinated by the Federal Department of Justice and Police (FDJP) and accessible by competent authorities including financial intermediaries. Notwithstanding, a rather simplified procedure will also be put in place for certain legal forms such as sole proprietorships, foundations, associations as well as limited liability companies.
Furthermore, the monetary threshold for due diligence obligations in the context of trade in precious metals and stones will be significantly lowered from CHF 100,000 to CHF 15,000.
An all inclusive obligation for due diligence will also be introduced for cash payments in real estate business irrespective of the monetary amount involved.
By the end of the consultation period the proposal is expected to be presented at the parliament in early 2024.
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With the reduction of compulsory shares, the new inheritance law, enforceable as of 01 January 2023[i], paves the way for more flexibility and freedom for testators as per succession planning. In other words, with the adoption by the parliament of the revision of existing laws back in 2020, the new law is set to grant more leeway to testators as to disposition of larger share of their estate.
In a nutshell, the main changes include the following:
- reduction of compulsory share for direct descendants to 50%;
- abolishment of compulsory share for parents;
- an additional option for married couples in ongoing divorce proceedings to disinherit one another prior to the final decree being rendered;
- exclusion of pillar 3a savings from the mass of the estate;
- prohibition of donation in inheritance contracts, except for cases where there may be an explicit consent of all contracting parties.
In the context of divorce proceedings, until recently a spouse’s claim to inheritance and a compulsory share would only be void with the final decree having been rendered.
Moreover, it is decisive as to whether a last will (testamentary disposition), respectively an inheritance contract is drawn up or not. In case of a last will, the legal heirs’ compulsory share will now be reduced by half, amounting to one quarter of the total estate in question. The compulsory share of a surviving spouse or registered partner would nevertheless remain the same, i.e. at one quarter of the total estate.
In the absence of a testamentary disposition, on the other hand, share division based on statutory succession shall remain unchanged, i.e. 50% entitlement for surviving spouse, respectively 50% for legal heirs.
The right of usufruct has also been amended. Simply put, usufruct is the right of direct offspring to defer the use of their inherited assets to the benefit of the surviving spouse. This spousal benefit will be expanded in that the surviving spouse may now be granted full ownership of 50% of the estate instead of 25%, and accordingly the remaining 50% of the estate can be allocated to usufruct.
Cohabiting partners, will nevertheless still have no statutory right to inherit from their partners. Any preferential treatment of cohabiting partners must continue to be regulated in testamentary dispositions or inheritance contracts.
Relevantly, corporate succession[ii] in family businesses is set to undergo a simplification revision. This includes provisions on valuation of companies and the right to allocate a business to one heir based on a judicial decision, among other things.
Given a potential cross border element of some inheritance cases, amendment of the international succession angle of the Swiss federal act on private international law is also underway[iii], which would in principle ensure conformity between the Swiss law and the EU Succession Regulation (No. 650/2012).
The Swiss already rejected the proposal for a 2018 federal law on electronic identification services (e-ID Act) on 7 March 2021. As a voluntary system, the proposed Act aimed at unique identification of individuals by means of assigned e-IDs, provision of which would be by a number of federally approved providers acting as single access points. The identity providers would either be private companies, communal or cantonal authorities. Given that generally the required know-how for such technical developments predominantly remain in the hands of private sector, the proposed Act would have effectively paved the way for public-private partnerships, which could be seen as one of the central points for public objection.
On a trust-sensitive subject as such, reliance mainly on public-private partnerships with a centralised governance model seemed rather compromising where digital representation and identification of users would be reduced to a mere business matter.
Fast forward to summer 2022 when a new draft law was announced. Moving away from a purely centralised model, the new state-operated infrastructure – namely the e-ID ecosystem – is seemingly set to embed core principles such as data protection by design, self-sovereign identity management and data minimisation. In addition, a decentralised data storage mechanism would be integrated in the infrastructure. Digital credentials would then be issued both by the state and private actors.
In this context, a public consultation period was initiated with the deadline of 20 October 2022[i].
In essence, the proposed Act[ii] is drafted based on four principles, namely data protection through technology, data security, data economy and decentralised data storage. The system will be offered free of charge and voluntary, hence revocable at the request of an e-ID holder. With privacy enhancing techniques (PET) in place, the ecosystem would in principle ensure that generated digital proofs of users are not visible to the issuers of these, nor would the content of the said proofs be accessible to the infrastructure providers.
With the federal office of police (fedpol) being assigned as the issuing authority, it is expected that by the end of year 2023 the parliamentary consultations for the proposed Act would commence.
With similar developments in the European Union (EU), in summer 2021 the 2014 Regulation on electronic identification and trust services for electronic transactions in the internal market (eIDAS) was set to undergo a revision with an aim to extend its current scope, among other things. In this regard, a proposal for a regulation, namely eIDAS 2.0, was also put forward in order to establish a framework for a European Digital Identity.