Upcoming revision of the Swiss AEOI legislation

New AEOI Partner States

On January 1, 2021 the AEOI Agreements between Switzerland and the following states will enter into force:

• Albania

• Brunei Darussalam

• Nigeria

• Peru

• Turkey

The agreements with Peru and Turkey are reciprocal which means that the first exchange of information on reportable financial accounts with these states will take place in 2022.

Albania, Brunei Darussalam and Nigeria are treated as temporary non-reciprocal jurisdictions. These states will provide information on financial accounts to Switzerland in 2022. However, they will not receive information from Switzerland if they have not implemented the requirements of the AEOI standard regarding confidentiality and data safeguarding by that date.

Revision of the Swiss AEOI Act and the Swiss AEOI Ordinance

On January 1, 2021 the new revisions of the Swiss AEOI Act and the Swiss AEOI Ordinance will enter into force. The most important changes are the following:

• For the purpose of calculating account balances and values, FIs must now use U.S. dollars instead of Swiss francs. This also applies for the threshold application (e.g. if the FI determines whether a dormant account is exempt for AEOI purposes).

• Furthermore, accounts of condominium and of co-owners associations, can no longer be qualified as nonreporting FIs. However, accounts of such account holders can still be qualified as exempt accounts, if they fulfil the respective regulatory requirements.

• In addition, accounts that were treated as exempt accounts because they were subject to such a treatment in the countries that they were resident in, can no longer be treated as exempt by the FI. 

• Maintaining new accounts for which the FI does not obtain a self-certification immediately is now only possible, if (1) the account holder is an entity and the FI can determine, based on publicly available information, that the entity is not a reportable person, or (2) if other exceptions explicitly specified by the Swiss Federal Council in the Swiss AEOI Ordinance apply. According to the revised Swiss AEOI Ordinance, these "other exceptions" are (1) a change of a policy holder in a life insurance contract due to a legal succession, (2) a change of the account holder based on a decision by a court or other authority or (3) a change of a beneficial interest holder in a trust or a similar legal arrangement based on the trust or foundation deed. If the FI relies on any of the exceptions provided in the Swiss AEOI Ordinance, the FI must obtain a self-certification of the account holder within 90 days after the account opening. 

• For pre-existing low-value accounts which the FI subjected to limited due diligence procedures by using the residence address test, using the address obtained with a form obtained for KYC/AML-purposes is no longer considered documentary evidence within the ruleset of the residence address test. For these accounts, either another documentary evidence or a self-certification must be obtained.

• For trusts that are FIs and make use of the status “Trustee-Documented Trust”, it has been specified that such trusts must register with the FTA and add the prefix “TDT” before their name during the registration.

• In addition, the record retention period for AEOI-related documentation was harmonized with the provisions of the Swiss Code of Obligations, which means that all such documentation has to be retained for ten years. 

It is expected that the revision of the Swiss AEOI guidelines to reflect these changes will follow early next year. 

Revision of the AEOI Data Transfer Manual

On October 19, 2020 the Swiss Federal Department of Finance and the Swiss Federal Tax Authority updated the AEOI Data Transfer Manual (Benutzeranleitung Datenübermittlung AIA).

The manual was revised to incorporate changes in the AEOI Portal.

AEOI Audit

To ensure the correct implementation of the AEOI by the FIs, the Swiss FTA may conduct AEOI audits, and we have seen some taking place already. We would like to remind that the Swiss AEOI Guidelines specify that the following procedures must be documented in an auditable way:

• Treatment of pre-existing accounts: The FI must document whether they applied the due diligence procedures for pre-existing accounts or decided to obtain self-certifications for accounts. Furthermore, if the FI decided to apply due diligence procedures for high-value accounts with respect to all its low-value accounts or a specific category of low-value accounts (e.g. accounts maintained by a Private Banking unit), this approach must be also documented.

• Relationship manager inquiry for pre-existing high-value accounts: The FI must document the due diligence procedures applied to its high-value accounts and especially the confirmation requested from relationship managers to confirm on a yearly basis which of their accounts were reportable accounts (relationship manager inquiry). The responsible body within the FI must document the results of these inquiries. 

To be prepared for the AEOI audits, the FI must ensure that adequate documentation (e.g. policies, procedures, as well as file notes and memorandums regarding procedures performed in the past) is present. In addition, a AEOI health check, performed by an internal or an external reviewer, may help to identify gaps and to prepare for the audit. Should you need our support with your AEOI Health Check, please do not hesitate to contact us.