Introduction of a Central Transparency Register in Switzerland for Registration Beneficial Owners of Companies and Other Legal Entities

Background and Necessity for the Transparency Register

Criminals exploit the lack of transparency surrounding legal entities to gain access to the financial system. By using complex structures involving shell companies or nominees, the criminal actors behind them can conceal their true identities and channel illegal funds into the economic cycle. The Swiss financial centre is not immune to this global problem.

Swiss companies have therefore been required to maintain an internal register of beneficial owners for several years now. However, due to the limited access of responsible authorities to such internal company information, these measures have proven insufficient to effectively combat financial crime. The new Transparency Register, which is managed by the Federal Department of Justice and Police (FDJP), is intended to give the relevant authorities and other authorised individuals quick, secure and efficient access to information about the actual controlling owners of legal entities, thereby strengthening Switzerland’s reputation as a financial and business centre. In future, an inspection body based at the Federal Department of Finance (FDF) will monitor the completeness and accuracy of the reported data.

Scope of Application and Legal Entities Affected

LETA applies to a wide range of legal entities (Affected Companies), including:

• Swiss legal entities such as companies limited by shares, limited partnerships, limited liability companies, cooperatives, investment companies with variable or fixed capital (SICAV/SICAF) and limited partnerships for capital investment schemes,
• Foreign legal entities with actual management, real estate or branches in Switzerland,
• trustees domiciled or resident in Switzerland or those who manage trusts in or from Switzerland.

The following are exempt: listed companies and their majority shareholdings (>75%), pension funds and legal entities owned by public authorities.

Beneficial owners

A beneficial owner of an Affected Company is any natural person who ultimately controls the company by holding, either directly or indirectly, alone or in concert with others, at least 25 per cent of the company’s capital or voting rights, or who controls the company in any other way.

The draft LETO specifies the criteria for the types of control covered.

Control through indirect participation by the beneficial owner is deemed to exist if the beneficial owner holds at least 50 percent of the capital or voting rights in one or more intermediate companies which themselves directly or indirectly hold at least 25 percent of the capital or voting rights in the Affected Company.

Control by other means shall include any other form of exercising significant influence within the Affected Company. Depending on the characteristics of the company and the circumstances, this influence may be exercised through formal or informal agreements with shareholders or partners or agreements with equivalent effects, debt instruments such as convertible bonds or profit-participating loans, articles of association or equivalent documents of the company, connections between family members or fiduciary relationships of a formal or informal nature.

If no person meets the defined criteria for controlling the Affected Company, the most senior member of the governing body must be entered into the Transparency Register. This refers to the person who chairs the executive management of the Affected Company.

Identification and Reporting Obligations

Each Affected Company must:

1. identify its beneficial owners;
2. verify their identity and the nature and extent of their control; and
3. report this information electronically to the Transparency Register.

The draft LETO specifies further information and evidence that the Affected Company must obtain and report to the Transparency Register via an electronic platform. It also sets out the procedure to be followed if the Affected Company is unable to identify or verify beneficial owners based on the information received.

Registration in the register is mandatory but free of charge.

In certain cases, reports may be submitted via the cantonal commercial register office, with which an electronic interface is set up. Additionally, a simplified notification procedure has been foreseen for certain Swiss companies with a simple structure.

The company’s highest management or governing body is ultimately responsible for the accuracy and timeliness of the report, even if the task is delegated internally or externally.

Companies rely on the cooperation of their shareholders, quota holders, and beneficial owners. These individuals must therefore cooperate in accordance with the LETA by providing the necessary information within one month of acquiring control or at the request of the company.

Intentional violation of these obligations is punishable by a fine of up to CHF 500,000.

Deadlines for Reporting

Following its registration in the Commercial Register or, in the case of a legal entity governed by foreign law, following its submission to LETA, the company has a period of one month to report to the Transparency Register the identity of its beneficial owners, the nature and extent of the control exercised by such persons, and certain company identification details.

Changes to the facts entered in the Transparency Register must also be reported via the electronic platform within this period to ensure that the entries in the Transparency Register are always up to date. Changes in shareholding only need to be reported if they result in certain thresholds being exceeded or fallen short of. Certain changes in nationality, names or company names that have already been reported to other Swiss authorities shall also be exempt from reporting to the Transparency Register.

Prior to the required notifications to the Transparency Register by the Affected Company, the shareholders or quota holders, as well as the beneficial owners, are also required to report, within one month of the acquisition of control, the required information on the beneficial owners to the Affected Company or the shareholders / quota holders.

Supervision of Compliance with Obligations and Sanctions

If an Affected Company fails to comply with a warning or if the Affected Company has not succeeded in identifying the beneficial owner, the registering authority shall add a note to the entry for that company. This note alerts the authorities or persons consulting the Transparency Register that there are doubts as to the accuracy of the entered information.

Compliance with the reporting obligations is monitored by a supervisory body within the FDF. This body verifies whether the information in the Transparency Register is complete, accurate, and up to date, and takes the necessary measures in case of non-compliance. In serious cases, it may suspend the corporate and economic rights of the holder of the equity interests who refuses to cooperate.

In addition, each registered company is assigned to a risk category. The existence of a note automatically leads to assignment to at least the “medium risk” category. The supervisory body takes the risk category into account when prioritizing controls.

Access to Information in the Transparency Register

The Transparency Register is not public. Access is reserved in particular for the competent police, administrative and criminal prosecution authorities of the Confederation and the cantons, the Money Laundering Reporting Office, as well as the competent authorities for administrative assistance in tax matters. Financial intermediaries and advisors subject to the Anti-Money Laundering Act (AMLA) may also consult the Transparency Register in the course of fulfilling their due diligence obligations. However, they must continue to comply with the due diligence obligations pursuant to Articles 4, 8b, and 8c AMLA, as these remain unaffected by LETA. The parliament explicitly rejected any presumption of accuracy of the Transparency Register.

If a financial intermediary discovers a discrepancy between the information in the Transparency Register and the information at their disposal, and if the discrepancy raises doubts as to the accuracy, completeness or timeliness of the information on the beneficial owner of a legal entity, the financial intermediary must report the discrepancy to the Transparency Register within 30 days.

Entry Into Force and Transitional Periods

LETA is expected to come into force in 2026 at the earliest, after the optional referendum period has expired. The implementing ordinance LETO is expected to come into force at the same time or shortly thereafter,  as it is a key element of the FATF country review, which will begin at the end of 2026.

LETA provides for a number of transitional periods for companies and other legal entities. For companies, these depend, among other things, on the implementation of changes in the commercial register or on the statutory audit requirements to which the Affected Company is subject.

Conclusion

With LETA, Switzerland is closing an international regulatory gap and strengthening the integrity of its financial and business centre. For Affected Companies, their shareholders and beneficial owners, this will mean new obligations and organisational adjustments.

We are happy to assist you with any questions you may have about the Transparency Register and can help you to submit your reports to the Transparency Register in a timely and proper manner.