New Swiss Transparency Act to assign penalties for breach of reporting and disclosure obligations
Switzerland is scheduled to enact the Federal Act on the Transparency of Legal Entities and the Identification of Beneficial Owners of 26 September 2025 (Legal Entities Transparency Act or LETA), which introduces into Swiss law the obligation to report the beneficial owners of companies and trusts to the public Transparency Register maintained by the Swiss Federal Office of Justice.
Created as an additional tool in the framework for combating money laundering, organised crime and the financing of terrorism, the LETA is expected to enter into force in the second half of 2026.
Anyone failing to comply with the reporting and disclosure obligations under the LETA risks criminal liability. This article sets out who is subject to these obligations, what risks arise in the event of a breach, which authority is responsible for prosecution, and what consequences may follow upon conviction.
Companies are advised to take the necessary measures to ensure compliance with the reporting and disclosure obligations under the LETA and establish a clear internal allocation of responsibilities.
Obligations to identify, verify and report beneficial owners
The LETA introduces new obligations to identify, verify and report the beneficial owners of companies and trusts. Under the LETA, a beneficial owner of a company is any natural person who ultimately controls a company by holding, directly or indirectly, alone or in concert with third parties, at least 25% of the capital or voting rights or who exercises control over the company.
The newly introduced transparency obligations affect companies, their shareholders or partners, and the beneficial owners in a variety of ways.
Companies subject to the LETA must identify their beneficial owners and document the required information (e.g. surname, first name, date of birth, nationality, address and country of residence, and information on the nature and extent of the control exercised) and then report this information to the Transparency Register. The internal company register of beneficial owners, which already required a reporting obligation, is to be distinguished from this notification and will no longer be sufficient alone.
An entry in the Commercial Register may be sufficient instead of a separate notification to the Transparency Register when the company makes an entry in the commercial register and confirms that all beneficial owners are entered in the commercial register as partners or as members of the company’s governing bodies.
If the company is owned by a listed company, only the firm name, registered office and stock exchange information need to be obtained. If the company is unable to identify the beneficial owner, it must indicate this in the Transparency Register and communicate any pertinent information.
The following types of legal entities are subject to these obligations: public limited companies (Aktiengesellschaften), partnerships limited by shares (Kommanditaktiengesellschaften), limited liability companies (GmbHs), cooperatives (Genossenschaften), investment companies with variable capital (SICAVs), investment companies with fixed capital (SICAFs) and limited partnerships for collective investment schemes.
Also subject to the obligations are foreign legal entities with a branch registered in the Swiss Commercial Register whose actual management is located in Switzerland or own real property in Switzerland.
A reporting obligation also exists in connection with trusts.
Shareholders and partners are also subject to a reporting obligation if they hold, alone or jointly with third parties, shares or participations to an extent that enables control over the company. In such cases, they are obliged to disclose the beneficial owner to the company.
Lastly, beneficial owners are also subject to a reporting obligation. Any person who acquires the status of beneficial owner must report this to the relevant shareholders or partners. Where the new beneficial owner exercises control by other means or through several companies or persons, this individual must report the acquisition of beneficial owner status directly to the company.
Reporting deadlines, verifying information and disclosure obligations
Reporting and disclosure obligations are subject to time limits. Notifications to the Transparency Register must be made within one month of the event for the registration obligation. In the case of legal entities governed by foreign law, the notification subject to registration must be made within one month of their becoming subject to the LETA.
Transitional provisions are important for existing companies, which must register reportable facts in the Transparency Register within one month of the first amendment to the Commercial Register entry that was made after the Act’s entry into force. Where no Commercial Register entry is pending, existing companies must submit the notification, depending on the type of company, within a period of three to six months after the entry into force of the LETA in order to comply with the law. For existing companies governed by foreign law, a transitional period of six months from the entry into force of the LETA applies for the submission of the information subject to registration.
The Supervisory Authority (Kontrollstelle), part of the Federal Department of Finance, will carry out checks on the accuracy, completeness and currency of the information contained in the Transparency Register. If the Supervisory Authority determines that information in the Transparency Register is inaccurate, incomplete or not up to date, it will use the extensive powers at its disposal and take necessary measures to restore the proper state of affairs. These powers can even extend to ordering the dissolution and liquidation of a company according to the rules governing bankruptcy in cases of repeated breach of the reporting obligations.
The Supervisory Authority will often require the company to submit additional information to the Transparency Register concerning or in connection with the beneficial owner.
Breach of reporting and disclosure obligations is a crime
Due to the reporting and disclosure obligations and the establishment of the Supervisory Authority as a new supervisory body, the LETA will result in an increase in compliance tasks. Full compliance will be necessary to minimise the risk of criminal convictions of the persons within a company who are responsible for notifications and disclosures.
The introduction of the reporting and disclosure obligations under the LETA will be accompanied by the introduction of the following criminal offences:
- Fines of up to CHF 500,000 for intentional breach of reporting and disclosure obligations.
- Fines of up to CHF 500,000 for providing false information to the Supervisory Authority or to third parties commissioned by it. Information that is incomplete or misleading in substance will also be deemed false.
Natural persons responsible for the notifications and disclosures are criminally liable. For companies, the most senior member of the executive body must make the required notifications.
Although this task may also be delegated to other persons or to third parties, this senior member of the executive body remains responsible for the proper execution of the notification. In the case of public limited companies, the chairman of the board of directors is considered to be the most senior member of the executive body. This rule may not reflect the realities of companies, particularly those within group structures, but companies must take into account the responsibility of the most senior member of the executive body within their compliance organisation.
Under the applicable Federal Act on Administrative Criminal Law , criminal liability is not confined to a single natural person. By way of criminal guarantor liability (strafrechtliche Garantenhaftung), other persons may also be criminally responsible, such as the head of the department, which the company's internal rules deems responsible for such notifications or disclosures.
The company may be criminally liable only in exceptional cases where a fine of no more than CHF 5,000 is contemplated and the investigation of the persons criminally liable under Article 6 of the Federal Act on Administrative Criminal Law would require investigative measures that would be disproportionate in view of the penalty incurred.
Since the Act does not provide for the criminal liability of negligent breaches of duty, only intentional breaches are punishable. Intentional conduct also includes situations in which the possibility of a breach of duty (e.g. incomplete information) is seriously contemplated and accepted.
Consequences
The maximum fine of up to CHF 500,000 is extremely high. Although criminal offences provided for in the LETA are merely contraventions (Übertretungen), a fine of more than CHF 5,000 imposed by the prosecuting authority will be recorded in the Swiss criminal register. For an officer of an enterprise regulated by FINMA, this circumstance may call into question the individual’s fitness and propriety (Gewähr).
To control and minimise the criminal risk associated with the fulfilment of the reporting and disclosure obligations under the LETA, the company should clearly define the responsibilities in internal regulations. Where the company responsible for reporting and disclosure is part of an international group, which centralises reporting and disclosure obligation tasks, the exercise of the reporting and disclosure obligations must also be regulated within the group.
Outlook and recommended measures for companies
The LETA is a new instrument in the fight against money laundering, organised crime and the financing of terrorism. For the companies concerned, the LETA will also give rise to additional compliance costs. As the LETA provides for criminal penalties in the event of breach of reporting and disclosure obligations, companies are required to take appropriate organisational measures to minimise criminal risks for their governing bodies and the employees responsible for implementing LETA obligations.
Companies should take all necessary measures in anticipation of the enactment of the LETA. In particular, the following steps should be taken:
- Clearly define responsibilities — The internal or group-wide responsibilities for the preparation and submission of notifications to the Transparency Register and responding to requests for information from the Supervisory Authority must be clearly defined. Clear processes for the identification, verification and ongoing update of relevant information under the LETA must be established in order to reduce the risk of administrative criminal proceedings and criminal liability.
- Review directives and processes — Ahead of the LETA’s enactment, companies should review existing internal directives and processes and supplement them where necessary. In most cases, synergies with other reporting and documentation obligations are possible, which may contain any additional administrative burden.
- Establish control mechanisms — Control mechanisms should be put in place to ensure compliance with the statutory and regulatory deadlines and the requirements for the fulfilment of the reporting and disclosure obligations under the LETA.
- Document the basis for notifications and potential disclosures —Notifications to the Transparency Register and potential disclosures to the Supervisory Authority must be documented in a comprehensible manner and arranged so that it can be retrieved promptly.
- Update the register of beneficial owners — The register of beneficial owners must be regularly updated and reviewed.
- Conduct regular training — Responsible employees should be trained on a regular basis and made aware of the risks of breaching reporting or disclosure obligations.
For more information on reporting obligations and criminal proceedings in Switzerland, contact your CMS client partner or the CMS experts who contributed to this article.
