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CDB 20 establishes binding rules for Swiss banks and securities dealers regarding due diligence, especially in relation to customer identification, beneficial ownership, and the prevention of money laundering and terrorist financing. While the agreement does not explicitly mention wire transfers or the FATF Travel Rule by name, it imposes due diligence requirements that directly support the traceability, transparency, and accountability of wire transfer activities.
Identification of Contracting Parties
Under Article 4, banks must verify the identity of the contracting partner when establishing business relationships. This includes opening accounts, securities accounts, engaging in fiduciary transactions, and carrying out currency or precious metal trading, as well as for cash transactions exceeding CHF 15,000. Article 6 extends this requirement to transactions below the threshold if there is any attempt to evade detection through structuring or if there is suspicion about the source of funds.
Identification may be performed via face-to-face meetings, video identification, correspondence-based verification, or digital channels, all subject to strict documentation standards. The identity of individuals acting on behalf of legal entities must also be confirmed and recorded, particularly when those individuals initiate or authorise transactions such as wire transfers.
Beneficial Ownership & Controlling Persons
Chapters 3 and 4 address the obligation to identify the controlling person and the beneficial owner. Article 20 requires identification of any natural person holding 25 percent or more of a legal entity or partnership. If no such individual exists, the most senior managing director must be identified as a substitute. Article 27 further requires banks to collect a written declaration of beneficial ownership for all new business relationships involving account openings or securities transactions, regardless of whether a wire transfer is involved at that stage.
In both cases, banks must obtain and retain signed forms (Forms K and A) documenting the relevant individuals’ full details, such as name, date of birth, nationality, and domicile address. These declarations are essential for ensuring that originator and beneficiary information associated with future transactions, including wire transfers, is known and verifiable.
Specific Rules for Intermediated & Collective Accounts
The agreement contains special provisions for collective accounts and safekeeping accounts. Article 37 states that a complete list of beneficial owners must be provided and updated in the event of any changes. Where the bank is not the depositary for transactions involving securities, currencies, or commodities, Article 27(3)(e) allows limited exemptions if payments and deliveries occur via another bank. This is relevant for wire transfers handled through intermediaries or correspondent banking chains.
Record Keeping & Timing
Article 45 stipulates that identification documents must be available before an account can be used. While exceptions are allowed under a documented risk-based approach, all missing information must be obtained within 30 days. Otherwise, the account must be frozen. These provisions ensure that originator and beneficiary information is captured before any wire transfer is permitted.
Banks are also required under Articles 44 and 46 to monitor and repeat due diligence procedures if doubts arise about a customer’s identity or if previous declarations appear false or incomplete. This creates a safeguard against attempts to obscure the parties involved in a wire transfer.
Prohibitions on Misconduct & Active Assistance
CDB 20 explicitly prohibits active assistance in capital flight and tax evasion. Chapters 6 and 7 make clear that banks must not help clients conceal transactions from authorities, provide incomplete attestations, or omit relevant details in financial statements. These provisions reinforce the principle that all wire transfers must reflect accurate originator and beneficiary data, and that banks must not support conduct designed to obscure it.
Enforcement & Sanctions
Compliance with CDB 20 is monitored through internal audits and independent reviews. Violations may be investigated and sanctioned by the supervisory board of the Swiss Bankers Association. Fines of up to CHF 10 million may be imposed for serious breaches, especially where due diligence requirements have been wilfully ignored in relation to high-risk transactions or account structures.
Conclusion: WTR Compliance Integration
The 2020 Agreement on the Swiss banks’ code of conduct with regard to the exercise of due diligence provides a comprehensive regulatory framework that supports wire transfer regulation. By mandating the identification of contracting parties, controlling persons, and beneficial owners, and by ensuring robust documentation and monitoring practices, CDB 20 enables Swiss banks to fulfil the core requirements of traceability and transparency. While it does not duplicate the technical language of the FATF Travel Rule, the agreement serves as a foundational instrument for regulating the flow of funds in and out of the Swiss banking system, including through wire transfers.