Legal Background and Risks

Banks regularly contact their clients to clarify unusual transactions. This is typically due to their statutory duty to combat money laundering: under the Swiss Anti-Money Laundering Act (AMLA), banks are required to investigate the economic background of significant or extraordinary transactions. Unusually high deposits, exceptionally large withdrawals, cross-border transfers, large cash withdrawals, and other exceptional circumstances may attract a bank’s attention.

If a bank is unable to plausibly and comprehensibly document transactions despite repeated requests to the client, it may consider this an indication of money laundering or other criminal activity. If a bank has reasonable grounds to suspect that an account is connected to illegal conduct, it is legally obliged to file a suspicious activity report with the Money Laundering Reporting Office Switzerland (MROS). This would typically result in an immediate freezing of the account. MROS would review the case and, if the suspicion is substantiated, forward it with all relevant documentation to the competent public prosecutor’s office. The latter would open an investigation and usually uphold the account freeze (in extreme cases for several years until the criminal proceedings are concluded).The statements provided by a client to their bank are therefore of great importance and can influence how the proceedings develop.

In the worst-case scenario, criminal proceedings may lead to long-term investigations, prolonged freezing of assets, potential confiscation (in the event of a conviction), and depending on the outcome, substantial fines or custodial sentences, in addition to the imposition of investigation and procedural costs. However, such consequences require that the suspicion against the client is substantiated and that the financial assets originate from a criminal offence.

Below you will find guidance on how to best respond to inquiries from your bank regarding your transactions:

Dealing with Bank Inquiries

• Offer a written response: Banks often initiate contact by phone and may address matters abruptly. Do not respond hastily over the phone if the questions are not easy to answer. Avoid making any statements that you cannot confirm with certainty. Request that the bank submit its inquiries in writing. This allows you to carefully review the matter and formulate a considered response. After a call from the bank, note the date, time, duration of the call, the name of the caller, and the questions asked.

• Cooperate in the case of unproblematic transactions: If there are no legal concerns, you should generally provide open and honest information. Honest and precise explanations usually lead to clarification. If everything is in order and you can respond quickly and convincingly, there is typically nothing to fear.

• Exercise caution in the presence of red flags: If you are uncertain about specific points, fear potentially incriminating elements (e.g., indications of tax evasion or other illegal activities), or if you have forwarded or held funds from third parties via your account, be very cautious with your statements and seek legal advice. Remember that, in case of suspicion, the bank will report to MROS and criminal proceedings may follow. Therefore, always formulate your responses with great care. In case of doubt, obtain legal assistance at an early stage.

• Documentation: Compile all relevant documents (e.g., contracts, invoices, account statements). Review your information thoroughly before responding. Inconsistent, vague, or contradictory statements may raise further doubts and prolong investigations or even trigger a report to MROS.

• Consider alternatives: Note that there is no legal entitlement to a bank account in Switzerland. Banks may terminate relationships without providing reasons, even where no misconduct has been proven. Living without a bank account is virtually impossible. If your account is closed or frozen, this can lead to significant and unexpected complications. When opening a new relationship, many banks inquire whether the client has ever been rejected or had an account terminated by another bank, or whether proceedings were initiated. If you must answer “yes” to one or more of these questions, most banks will refuse to open an account. You may therefore want to consider opening a secondary account with another bank as a precautionary measure.

• Seek legal advice: If the situation is complex or you are uncertain, obtain legal counsel. Competent legal advice can assist you in preparing your responses and assessing potential risks. This will help you avoid mistakes and protect your interests. ADVORO is happy to assist if you are unsure how to proceed in such a case. Contact us early for individual legal support.