Transparency of Legal Entities and Enhanced Obligations for Advisors: A New Regulatory Era

On 26 September 2025, the Swiss Parliament adopted the new Federal Act on the Transparency of Legal Entities and the Identification of Beneficial Owners (LETA), as well as significant amendments to the Federal Act on the Prevention of Money Laundering and Terrorism Financing (AMLA). This reform is part of a context of increasing international pressure, particularly from the Financial Action Task Force (FATF), aimed at strengthening the transparency of legal structures and preventing their misuse for illicit purposes. Its central element is the creation of a Federal Register of Beneficial Owners (the "Register"), designed to facilitate the identification of natural persons who ultimately control the entities subject to the LETA.

Frédéric Bétrisey Partner, Bär & Karrer

Kalia Tsimaratos Junior Associate, Bär & Karrer

Portfolio managers are affected in two respects. On the one hand, as legal entities themselves subject to identification and reporting obligations, and on the other hand, as financial intermediaries bound by enhanced due diligence obligations. 
This article sets out the main elements of the reform and briefly discusses its practical implications.

Scope of the LETA

The LETA applies to corporations (sociétés anonymes, SA), partnerships limited by shares, limited liability companies (sociétés à responsabilité limitée, Sàrl), cooperative, investment companies with variable capital (SICAV) or fixed capital (SICAF), and limited partnerships for collective investments. Trustees domiciled or having their registered office in Switzerland, as well as those who administer trusts in Switzerland, are also covered, unless they are already subject to the AMLA.

The LETA also targets certain foreign legal entities, provided they have a sufficient nexus with Switzerland. This is the case where such entities have a branch in Switzerland registered with the commercial register, have their effective place of management in Switzerland, or hold or acquire real estate in Switzerland.

The breadth of the LETA's scope is particularly significant for portfolio managers, whose structures most commonly take the form of a corporation or a limited liability company. These entities will be directly subject to the duty to identify and report their beneficial owners.

Exemptions apply, in particular, in respect of listed companies and their subsidiaries more than 75% owned, directly or indirectly, occupational benefits institutions subject to supervision, and legal entities at least 75% owned by one or more public authorities. These exemptions are based on the existence of an existing transparency or supervisory regime deemed sufficient, but do not relieve entities from the due diligence obligations arising under other regimes, in particular the AMLA. The benefit of an exemption must be established and documented, particularly where the level of ownership approaches the 75% threshold.

Creation of the Federal Register of Beneficial Owners

The beneficial owner is the natural person who ultimately exercises control over a legal entity. The determining criterion is, therefore, that of control, which is deemed to exist where a natural person holds, directly or indirectly, alone or in concert with third parties, at least 25% of the capital or voting rights. A participation is considered to be held indirectly where it is held through one or more natural persons, legal entities, partnerships or intermediary trusts.

It should be noted that the definition of control also encompasses control exercised by other means, whether direct or indirect. Finally, where no person meets the aforementioned control criteria, the highest ranked member of the governing body is deemed to be the beneficial owner.

The central obligation imposed on entities subject to the LETA consists of identifying their beneficial owner. The information to be provided includes, in particular, the name, date of birth, nationality, address, and the nature and degree of control exercised over the entity. These entities must notably collect information on the chain of control where one of the situations provided for in the Ordinance on the Transparency of Legal Entities and the Identification of Beneficial Owners ("OELA") arises.

If a company is unable to identify or satisfactorily verify the beneficial owner, it must document this fact and the steps undertaken. The information collected must be kept up to date, accompanied by supporting documents, and retained in Switzerland for ten years from the date on which the relevant person ceases to be a beneficial owner.

Once the information has been collected, it must be transmitted to the Register, together with the corresponding supporting documents, within one month of the entity's registration in the Swiss commercial register and, in the case of a foreign entity, within one month of becoming subject to the LETA. 

The LETA further imposes cooperation obligations on shareholders, trustees and beneficial owners themselves, in order to enable the collection, verification and transmission of the required information. For portfolio managers, this entails the establishment of a structured internal process to formally identify their own beneficial owners, ensure regular monitoring and warrant prompt updating in the event of any change in shareholding or control.

A supervisory body linked with the Federal Department of Finance will conduct inspections. In the event of repeated violations, the LETA provides for the suspension of membership and financial rights or the refusal of registration in the commercial register, as well as criminal sanctions in the case of intentional breaches (fines of up to CHF 500,000). 

Access to the Register and Implications for Portfolio Managers

The Register, maintained in electronic form by the Federal Office of Justice, is not public. Access is limited, notably to criminal prosecution authorities, supervisory or tax authorities, and financial intermediaries subject to the AMLA, within the framework of their due diligence obligations.

For portfolio managers, the Register will constitute a new source of information in connection with the onboarding of new business relationships, periodic reviews or clarifications involving complex structures. It should be noted that the Register does not alter the fundamental principle that the responsibility for verifying the beneficial owner rests with the financial intermediary. However, under the LETA, financial intermediaries may rely on the information contained in the Register, provided that their review, carried out with the diligence required by the circumstances, reveals no anomaly.

A practical challenge will lie in the management of discrepancies between the information provided by the client and that recorded in the Register. In the event of a discrepancy raising doubts as to the accuracy or completeness of the information, the financial intermediary must undertake clarifications with the relevant company and grant it a reasonable period to remedy the situation. If the doubts persist, a report to the competent authorities will be required.

Extension of AMLA Obligations to Certain Advisory Activities

The amendments to the AMLA broaden the scope of persons subject to due diligence obligations to include professional advisors involved in transactions related to non-operating legal entities and certain real estate transactions. The professionals concerned are those who participate in the creation, administration, sale or purchase of companies or trusts, or who provide professional domiciliation services for more than six months.

The extension specifically targets non-operating legal entities such as domiciliary companies, real estate transactions and related financial operations carried out on behalf of third parties, and advisors acting in the capacity of employees of public officers in connection with the targeted transactions. 

Certain exceptions apply to professionals such as attorneys-at-law and notaries when acting in judicial proceedings, or advisors subject to the supervision of the Federal Audit Oversight Authority. Other exceptions relate to types of transactions, including family transactions or transactions of a low amount, the creation of foundations upon death, as well as activities related to operating entities. 

Advisors will henceforth be required to verify the identity of the client, identify the beneficial owner, retain appropriate documentation, identify the purpose and object of the transaction, and clarify the background in the event of increased risk. Obligations are differentiated according to risk. They may be simplified or enhanced depending on the complexity of the transaction or the nature of the client. Organisational measures are required to prevent money laundering, terrorism financing and violations of coercive measures.

Many portfolio managers carry out ancillary activities that may fall within this scope, particularly in connection with the management or administration of structures. Where an activity falls under both financial intermediation and advisory services, the AMLA rules applicable to financial intermediaries take priority, unless otherwise declared.

Advisors must affiliate with a recognised self-regulatory organisation and immediately report any well-funded suspicion of money laundering, terrorism financing or criminal origin of assets. Professional secrecy is preserved: reports must not be disclosed to clients or third parties, and access is strictly regulated. Attorneys-at-law and notaries are required to report only if the information is not covered by privilege. 

Next Steps and Practical Measures

The entry into force of the LETA and its implementing provisions is expected in the second half of 2026. The entities concerned must transmit information on their beneficial owners within one month of any change to their entry in the commercial register, but no later than the maximum periods prescribed by the LETA (see Art. 51 LETA).

Conclusion

The new requirements arising from the LETA and the amendments to the AMLA impose a significantly more demanding framework on portfolio managers, under which these are required to demonstrate greater transparency regarding the beneficial owners who control them. A central issue will be to identify complex structures more precisely, and to document and update this information rigorously.

Beyond the adjustment of internal processes, this development entails a change in posture: portfolio managers will need to anticipate risks associated with complex structures, strengthen their critical analysis, and demonstrate, at all times, the robustness of their compliance framework.

Biographies

Frédéric Bétrisey is an attorney-at-law and partner at Bär & Karrer in Geneva. His practice covers all aspects of banking regulation and financial services, including the rules applicable to collective investment schemes and financial products. He also assists his clients with financing transactions and the drafting of contractual documentation, in particular relating to asset management and investment advisory mandates. He also acts as legal counsel in the context of securitisation programmes and covered bond transactions.

Kalia Tsimaratos is a trainee lawyer (avocate-stagiaire) in the Banking & Finance Law department at Bär & Karrer. She completed her legal studies at the University of Geneva (BLaw, MLaw, ECAV) and obtained an LL.M from IE University (Madrid). She has also gained corporate law experience, both in law firms and within a major audit firm.