KYC & AML Compliance

Switzerland is committed to the implementation of the Automatic Exchange of Information Standard (AEOI) set up by the Organisation for Economic Co-operation and Development (OECD). This new international standard for AEOI has been validated by Switzerland and implemented through the Federal Law on the Automatic Exchange of Information in tax matters (LEAR) which came into force on 1 January 2017.

Many countries are concerned (countries concerned) by this standard, which requires the collection of certain data and information on the Bank's clients. Switzerland has signed an agreement for the introduction of AEOI with the following partner states (Partner States): the 28 member states of the European Union (including Great Britain), Australia, Canada, Guernsey, Jersey, Isle of Man, Iceland, Japan, Norway and South Korea. Agreements have been signed with 43 other countries that are expected to be implemented in 2018. The list of Switzerland's partner states can be consulted at any time on the website of the State Secretariat for International Finance (SIF), which can be accessed via this link: www.sif.admin.ch .

This new standard has consequences for clients holding an account with the Banque Cantonale de Genève (BCGE) and domiciled for tax purposes in a country with which Switzerland has concluded agreements for the automatic exchange of information. As such, BCGE is required to transmit annually to the Federal Tax Administration (FTA) personal data as well as data concerning accounts of clients domiciled in a partner state. The FTA in turn informs the tax authorities of the country of residence concerned.

These exchanges will start with Switzerland as from 2018. The data exchanged will cover the previous calendar year, for the first time for the year 2017.

FATCA

What is FATCA?

The Foreign Account Tax Compliance Act (FATCA) is a US law aimed at combating tax evasion by US persons holding financial assets outside the United States. Implementing FATCA has been made possible through the conclusion of an intergovernmental agreement (IGA) with the United States, which exists in the form of two models (Model 1 & Model 2 IGA). The primary differences between Model 1 and Model 2 under FATCA lie in the manner and place of exchange of information.

In Model 1, information is exchanged between governments. Financial institutions report information about US account holders to their local tax authority, which in turn shares it with the US Internal Revenue Service (IRS). This model can be reciprocal (Model 1A), where data is exchanged in both directions, or non-reciprocal (Model 1B), where foreign information is shared with the United States only.

On the other hand, Model 2 requires financial institutions to deal directly with the IRS. This model includes obtaining consent from account holders and allows for aggregate reporting, followed by specific data requests from the IRS in the form of a bulk request. Model 2 imposes a heavier reporting burden on financial institutions and does not provide for the reciprocal exchange of information as in Model 1A.

The current Model 2 IGA, concluded between Switzerland and the United States, entered into force on 2 June 2014 and the corresponding FATCA implementation act entered into force on 30 June 2014. However, the Swiss Federal Council recently approved the transition to a Model 1 IGA with entry into force on 1 January 2027. This transition to Model 1 will facilitate the exchange of information in both directions and streamline the reporting process by aligning Switzerland with global standards.

What is the impact of FATCA on the Bank’s clients?
To meet FATCA obligations, the Bank must identify all its new and existing clients as natural persons, legal entities or other entities in order to determine their status under FATCA and identify potential US account holders.

For natural persons identified as US Persons :
By definition, a US person includes US citizens, green card holders and certain individuals who spend significant time in the United States. Clients identified as US persons must provide additional documentation to ensure compliance with FATCA. Information about them, such as account balances, income generated by their accounts and personal data, is to be reported to the IRS as required by law.

For natural persons identified as non-US Persons :
When clients are identified as non-US Persons, no additional steps are required. However, should there be a change in circumstances or an indication of a connection to the US, the client will have to submit new documentation in order to be once again considered compliant.

For US legal entities :
US legal entities, such as companies, partnerships and trusts, must identify themselves as such to the Bank and provide information on their beneficial owners (the natural persons holding control). .

For non-US legal entities :
Even if they are not American, entities must comply with documentary requirements to identify possible links with the United States. To achieve this, they must provide information on their structure, activities and beneficial owners.