Switzerland’s Wealth Management Update: Law, Transparency, Digital Assets, and Philanthropy

Date: 13 Nov 2024

Karen Jones

Switzerland continues to modernize its regulatory and financial framework, critical updates are reshaping its approach to issues such as digital assets, transparency, and client services.

Switzerland has long been synonymous with private wealth management, with a reputation built on discretion, neutrality, and a sophisticated financial ecosystem. This nation’s governance and stable financial environment make it one of the world’s leading hubs for ultra-high-net-worth individuals (UHNW) and families. As Switzerland continues to modernize its regulatory and financial framework, critical updates are reshaping its approach to issues such as digital assets, transparency, and client services, ensuring it remains competitive and compliant with evolving global standards.

Swiss Financial Sector and Access to the European Union

Switzerland’s financial sector remains a global leader in cross-border wealth management, capturing around 25% of the market. However, as Denis Pittet, Managing Partner at Lombard Odier and President of the Geneva Financial Centre, points out, restricted access to the EU market presents significant challenges. “More than half of banks with over 200 employees stated that lack of access to the European market is likely to structurally change their business model in a significant way.” Swiss banks have long advocated for a system akin to the U.S. Securities and Exchange Commission’s “institution-specific” model, which would allow them to register and offer services across the EU without establishing costly subsidiaries. The Federal Council has now opened dialogue with the European Commission on a “passport” approach for Swiss financial institutions to operate in EU markets. Switzerland’s recent Berne Financial Services Agreement with the United Kingdom is an innovative model that could serve as a blueprint for similar EU treaties, facilitating market access and setting regulatory precedence.”

Pittet says, “Switzerland is a global leader in cross-border wealth management, with a market share of around 25%. Wealth management is an export industry in the classic sense of the term, in that its services are produced mainly in Switzerland while two-thirds of its customers are domiciled abroad. According to SBA figures, clients based in the European Union (EU) account for 40% of the cross-border private assets managed in Switzerland, totaling approximately 1 trillion CHF in assets. Swiss financial intermediaries employ around 20,000 highly qualified professionals to serve these international customers. Unfortunately, lack of access to the European market is a major handicap for the Swiss financial sector, forcing Swiss companies to increase their staff in EU countries every year rather than create jobs in Switzerland.”

“The financial sector is far from a passive observer of this situation. Under the auspices of the Swiss Bankers Association, the Swiss financial industry has proposed an SEC-like “institution-specific” approach to European markets. In an historic first, the Geneva Financial Center joined forces with its counterparts in Zurich (Zürcher Bankenverband) and Lugano (Associazione Bancaria Ticinese) to petition the Federal Council in support of this approach. As a result, the “institution-specific” approach was included in the dialogue on regulation between Switzerland and the EU which resumed in the summer of 2024. We aim to ensure this approach is discussed with the European Commission and included in either a bilateral agreement or an upcoming revision of European rules on third countries.”

Legal Updates and International Commercial Courts

Alessa Waibel, Senior Associate of Reichlin Hess, Zug says, “Beginning in 2025, Switzerland’s revised Civil Procedure Code (CCP) will come into effect, which provides the legal basis for cantons to establish international commercial courts. These specialized courts, potentially located in Zurich and Geneva, will focus on cross-border commercial disputes, enhancing Switzerland’s attractiveness as a legal jurisdiction. Unique to these courts, proceedings can be conducted in English, making them more accessible to international parties. By expanding its dispute resolution offerings, Switzerland bolsters its reputation as a top-tier location for arbitration and commercial litigation.”

Increasing Transparency with Beneficial Ownership Registers

Stefanie Pfisterer, Partner, Homburger says, “With global pressure mounting for transparency, Switzerland has drafted a Federal Act on the Transparency of Legal Entities, anticipated to come into effect by 2026. This act requires a federal register of beneficial owners to aid in combatting white-collar crime. While it aligns with recommendations from international bodies like the Financial Action Task Force (FATF), the register will not be public; access is limited to specific authorities. Trustee information will also be monitored, though exemptions have been proposed for foundations, whose unique governance structures already reduce money laundering risks. This move marks a shift toward transparency while preserving privacy protections, a balance critical to Switzerland’s financial identity.”

Ariane Slinger, CEO and Peter Moorhouse, Managing Director, Ace International, Geneva confirm the details above and add that there will be fines of up to CHF 500,000 and criminal sanctions may be applicable for breaches of the new legislation. “While we are in favour of stronger measures to combat money laundering and improving the perception of Switzerland as a clean and fair business centre, we remain concerned about the global overreach related to transferring private client data as a matter of routine, often in contradiction to other data protection legislation and human rights. Time and time again we have seen the abuse of private client data by global governments, or through lack of due care in preventing leaks or theft of data, which is not for the benefit of society as a whole and especially not for the benefit of the individuals involved. There is also a question mark over how this transparency effectively helps in the fight against money laundering. Lawyers, notaries and other persons providing legal advice or accounting services may be brought into scope if they assist their clients in preparing or carrying out certain transactions.”

Hakim Berhoune, Managing Director, Geneva, Praxis Group. “The introduction of the Federal Act on the Transparency of Legal Entities and the Identification of Beneficial Owners in 2026 is aligning Switzerland with global standards set by organizations like the Financial Action Task Force (FATF). It reflects Switzerland’s commitment to maintaining its position as a reputable financial centre while addressing international concerns over the potential misuse of Swiss financial institutions for illicit activities.”

Gintare Nedelec, trust officer, Guardian Trust, Geneva. Switzerland says “Switzerland has recently adopted the Swiss-UK agreement regarding the recognition in financial services as investment services, banking, insurance, asset management which will help with the cooperation of both countries in the industry and will ease the accessibility of financial services for clients between these two jurisdictions. The Swiss government has drafted a proposal which is currently under consultation regarding a list of countries to start automatic exchange of information (AEOI) on crypto assets, as part of the Crypto-Asset Reporting Framework (CARF). The pressures for transparency are applicable to digital assets space where the need to share information and cooperate with other countries is becoming important matter fighting crime and money laundering. The UBO registers proposal in Switzerland has been questioned by the Swiss Federal Data Protection and Information Commissioner (FDPIC) by noting that there must be a valid reason and clarity on how these registers will be accessed and used if this is to invade registrant’s privacy.”

“The Swiss parliament has passed the revised version of the Private Internation Law act (nPILA approved 23.12.2023 by parliament) to avoid conflicts of law regarding successions and to provide the necessary clarifications required by recent case law and legal doctrine. The new law will provide more flexibility when planning cross border estates, while giving more freedom to testators. Trust License is still one of the main topics in the industry, changes of the threshold of assets under management forced smaller trustees to consolidate or move under professional trustees’ license. There are more trust companies receiving licenses and this does help with the cooperation between other financial service providers in Switzerland for onboarding and servicing clients, hopefully the due diligence collection processes will be simplified thanks to this.”

Flight of Wealth Amid Middle Eastern Tensions and higher taxation

The geopolitical situation in the Middle East has led to an increase in Swiss banking clients from Israel, as high-net-worth individuals seek financial stability and potentially less stringent tax conditions. Switzerland’s financial neutrality, highlighted by Ariane Slinger of Ace International, positions the country as a preferred destination during turbulent times. The trend underscores Switzerland’s resilience as a safe haven for global wealth, attracting clients amid rising regional instability.

Hakim Berhoune, Managing Director, Geneva, Praxis Group. ““In relation to the current tension in the Middle East we have noticed a notable influx of new accounts from Israeli clients. The trend reflects broader anxieties over regional economic impacts as well as the potential for stricter financial regulations or tax increases in Israel as the conflict continues.”

Art and transparency

Jutta Gangsted, Senior Associate at law firm Lenz & Staehelin. “Switzerland’s forthcoming federal transparency register aims to mitigate money laundering within the art industry. This legislation, expected to impact Switzerland’s art market in the coming years, will introduce regulations that require greater accountability from buyers, potentially impacting both local and international transactions.” 

Enhanced Regulations for Digital Assets and Crypto Transparency

Switzerland has embraced digital assets, with regulations now adapting to include crypto in its automatic exchange of information (AEOI) framework. Expected by 2026, these measures, as described by Dr. Markus Zwicky of ZP Law, will align Swiss standards for crypto assets with traditional financial regulations, closing transparency gaps and tightening anti-money laundering protocols. The inclusion of digital assets is anticipated to foster credibility in Switzerland’s crypto sector, ensuring robust regulatory compliance while promoting innovation. “Crypto-Asset Reporting Framework”, CARF should close gaps in the tax transparency system and ensure that providers of crypto assets are treated the same as the traditional financial sector. CARF governs the handling of crypto assets and their providers.”

Samy Reeb, Group CEO, PFIS Group who are wealth planners, insurance advisors and who also offer immigration advice agrees and says, “Switzerland remains one of the preferred destinations for anyone looking for financial safety for their assets and data, crypto-asset management services, and private wealth management. The growing acceptance of crypto currencies by well-established Swiss financial institutions along with the effective wealth management alternatives like investment in crypto discretionary mandates or crypto funds is attracting ultra-high net worth and institutional investors into Switzerland.”

Philanthropy: A Strong and Evolving Sector

Sabrina Grassi, Director General, Swiss Philanthropy Foundation. “The philanthropic sector in Switzerland is one of the world’s most vibrant, with over 14,000 charitable foundations managing assets worth around 140 billion Swiss francs. With regulatory demands increasing, alternative structures like umbrella foundations are emerging as efficient ways to manage charitable giving. Swiss Philanthropy Foundation (SPF) offers donor-advised funds, which simplify philanthropy while allowing for impactful giving. This model is increasingly popular with donors seeking a structured approach to philanthropy without the administrative burden, illustrating how Swiss philanthropy is evolving to meet the needs of modern donors.”

“The Swiss Federal Council recently introduced a draft law for consultation under the proposed Act on the Transparency of Legal Entities (LTPM). For foundations, the law would classify the most senior management member, generally the foundation board’s chairman, as the “beneficial owner.” The sector, however, is advocating for an exemption of public-benefit foundations from this law, given that Swiss public-benefit foundations are not controlled by any individual and therefore have no individual beneficial owners. In addition, they carry a low risk of money laundering and already comply with existing international transparency standards.”

“With more than 100 DAFs created representing 400 million Swiss francs since 2006, and over 30 million Swiss francs distributed annually to over 500 organizations globally, SPF offers its expertise to individual donors and families. It has proven effective for philanthropists, especially those with entrepreneurial backgrounds who wish to focus on their charitable impact while delegating administrative responsibilities. The SPF model, which pools costs and risks in a good governance framework, is attracting a growing number of donors.”

Etienne Eichenberger, co-founder of the Foundation Board Academy and managing partner of WISE Philanthropy Advisors. “Switzerland is often associated with a great tradition of philanthropy. The first foundation we know of, which is still active today, dates back to the 14th century. But we are also living in a time when the governance of all types of legal entities is being strengthened. The boards of foundations are no exception, even if their members act in a voluntary capacity. It was with this in mind that the Foundation Board Academy was created in 2022 to enable professionals who sit on the boards of charitable foundations to better meet the challenges they face in a changing society through training. The course is accredited by the Centre of Philanthropy Studies at the University of Basel. And did you know? In 2024, there were around 72,000 people on the boards of foundations in Switzerland. Only around 5% of them are in more than one foundation. The challenge of qualification is becoming at least as important as the composition of these boards in achieving the aims of the foundation and fulfilling their responsibilities.”

Sustainability entrepreneurship in Switzerland

George Bos, Founder, The Water Company who has the product the ‘natural bottle’ is pioneering innovations in sustainable packaging with their flagship product, The Natural Bottle. Currently looking for co-investors he says “This fully biodegradable, bio-based, and microplastic-free bottle is designed to disrupt the container industry across multiple sectors, from beverages to cosmetics. We aim to produce the first bottles in Q2 2025.” Bos says of other sustainable packaging and brands like Lush and L’Occitane that they are doing a good job but wonders if their ‘missions’ about sustainable packaging can be achieved. Of using glass instead, he says, “The problem is it makes the products heavy which affects shipping costs.”

Liechtenstein’s Regulatory Developments

Liechtenstein, though small, is closely aligned with Switzerland’s financial practices. However, its EEA membership introduces distinct regulatory developments, including the anticipated implementation of the EU’s Markets in Crypto-Assets Regulation (MiCAR) in 2025. This alignment with EU standards for digital assets reinforces Liechtenstein’s financial competitiveness while adhering to new EU anti-money laundering standards. Further, revisions to Liechtenstein’s trust laws aim to enhance international competitiveness and governance.

Sebastian Auer LL.M. (KCL), Attorney at law, Gasser Partner, Liechtenstein. “Liechtenstein is aligned with Switzerland in many, but by no means all aspects: Liechtenstein’s EEA membership in particular entails significant legal changes over the next few years that differ from those in Switzerland and will have a major impact on the small Principality situated in the heart of Europe: Of particular importance is Regulation (EU) 2023/1114 on Markets in Crypto-Assets (MiCAR), the aim of which is to create a harmonised legal framework within the EU/EEA for persons operating in the primary and secondary crypto asset markets. MiCAR will become directly applicable in Liechtenstein as soon as the corresponding decision of the EEA Joint Committee to incorporate the regulation into the EEA Agreement enters into force. The corresponding Liechtenstein transposition act is scheduled to enter into force on 1 February 2025.”

“Apart from that, Liechtenstein is expected to completely redesign the regulatory framework for banks and investment firms in 2025, which will lay the foundation for simplifying the legal framework and increasing the attractiveness as well as the competitiveness of the Liechtenstein financial centre. Finally, in the private client area, the planned revision of trust law is worth mentioning: After the Liechtenstein foundation underwent fundamental legal changes in 2009, the Liechtenstein legislator now felt that the time was ripe to also revise Liechtenstein trust law. It is not yet possible to say with certainty when the revision of trust law will come into force or in what form, but we expect it to increase legal certainty and the rights of discretionary beneficiaries of Liechtenstein trusts.”

Conclusion

Switzerland’s financial landscape is continuously evolving to address international pressures and maintain its competitive edge. From new transparency laws and access to the EU market to specialized courts and digital asset regulations, Switzerland’s approach balances its historical reputation for confidentiality with global demands for accountability and transparency. Switzerland’s ongoing reforms and strategic alliances, like those with the UK, signal a proactive stance in adapting to global financial trends. As regulatory measures in areas such as digital assets and philanthropy gain prominence, Switzerland’s adaptability will play a pivotal role in securing its future as a trusted and innovative financial centre.

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