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LVMH limits to cash payments in Switzerland

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  1.  Please give details of any existing national legislation in your country that is specifically relevant regarding the obligations and limitations for LVMH shop assistants dealing with cash payments?
  2. Are there any changes or developments expected in the near future?
  3. Is there a maximum amount of cash a customer may use to purchase items in a store in your country? If yes, what is the amount?
  4.  Are there any limitations in your country with regard to the acceptance of denominations of [euro] banknotes?
  5.  Are there any rules in your country on partial and/or related cash payments and is it clear what can or will be seen as a partial and/or related payment?
  6.  Is there a duty to report to an authority if a customer would like to pay in cash above the maximum amount and/or with a denomination of a banknote which is forbidden?
  7.  What are the competent authorities which oversee the enforcement of the relevant legislation?
  8.  If there is a duty to report, what is the competent authority to report to and what are the relevant responsibilities of LVMH in that respect?
  9.  What sanctions do the authorities have at their disposal to make sure that companies comply with the rules?
  10.  Are there any other relevant developments or issues regarding this matter, of which LVMH should be aware (e.g. privacy issues)?
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1. Please give details of any existing national legislation in your country that is specifically relevant regarding the obligations and limitations for LVMH shop assistants dealing with cash payments?

The relevant legislation in Switzerland is the Federal Act on Combating Money Laundering and Terrorist Financing of 10 October 1997, status as of 18 February 2020 (AMLA), and the Ordinance on Combating Money Laundering and Terrorist Financing of 11 November 2015, status as of 1 January 2020 (AMLO).

2. Are there any changes or developments expected in the near future?

The Swiss Anti-Money Laundering Law has been repeatedly revised in recent years and is currently undergoing another revision with further revisions expected in the future. The current revision, which is now in its final stages, aimed, inter alia, at lowering the thresholds triggering AML obligations for cash payments to dealers in precious metals and gemstones to CHF 15,000. However, the Swiss legislator (the Swiss parliament) ultimately declined this proposal. 

3. Is there a maximum amount of cash a customer may use to purchase items in a store in your country? If yes, what is the amount?

Yes, under the law currently in place cash payments exceeding CHF 100,000 trigger AML obligations for the dealers accepting them (Dealer Duties). These duties in particular consist of verifying the identity of the client, establishing the beneficial owner, and clarifying the background of a transaction in case it appears suspicious.

4. Are there any limitations in your country with regard to the acceptance of denominations of [euro] banknotes?

No.

The Dealer Duties are triggered even when cash payment is made in two or more instalments and the individual instalments are less than CHF 100,000, but the instalments added together exceed the threshold.

6. Is there a duty to report to an authority if a customer would like to pay in cash above the maximum amount and/or with a denomination of a banknote which is forbidden?

No, payments exceeding the threshold do not trigger any reporting duties per se. A reporting duty arises – in a nutshell – only if a specific indication or several indications are present giving rise to suspicion that the cash originated from a criminal offence and this suspicion cannot be eliminated despite repeated attempts at clarification.

7. What are the competent authorities which oversee the enforcement of the relevant legislation?

Dealers who are subject to Dealer Duties will appoint an auditor to verify compliance. This auditor will verify compliance with the Dealer Duties and will draw up a report for the attention of the responsible governance body of the dealer.

Criminal sanctions (see question 9 below) are enforced by the Swiss Federal Finance Department.

8. If there is a duty to report, what is the competent authority to report to and what are the relevant responsibilities of LVMH in that respect?

The authority to report to (see question 6) is the Money Laundering Reporting Office Switzerland ("MROS"). There are several modalities to be respected, and the dealer is mainly prohibited from informing the person concerned.

9. What sanctions do the authorities have at their disposal to make sure that companies comply with the rules?

A dealer who deliberately breaches his duty to appoint an auditor (see question 7) will be liable for a fine of up to CHF 100,000 (for intent) or CHF 15,000 (for negligence).

Moreover, a dealer who deliberately breaches his reporting duty (see question 6) will be liable for a fine of up to CHF 500,000 (for intent or CHF 150,000 (for negligence).

Eventually, dealers may also be subject to other criminal law sanctions if they do not comply with the Dealer Duties. 

10. Are there any other relevant developments or issues regarding this matter, of which LVMH should be aware (e.g. privacy issues)?

No, not specifically.

Authors

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Portrait ofReto Hunsperger
Reto Hunsperger, LL.M.
Partner
Zurich
Portrait ofMatthias Kuert
Dr Matthias Kuert, LL.M.
Partner
Zurich