On 1st October 2026, the Federal Act on the Transparency of Legal Entities and the Identification of Beneficial Owners (LETA) will come into force. It introduces a new federal transparency register which will centralise information relating to the beneficial owners (BOs) of entities subject to the Act. For portfolio managers, this register will constitute a new source of information in fulfilling their Anti-Money Laundering Act (AMLA) due diligence obligations. What information will this register contain? How will it document the BOs of trust structures or complex ownership chains? Under what circumstances will it include information on the control of foreign companies? And, above all, what will be the obligations of portfolio managers when the information in the register differs from that collected as part of the KYC process?
Why a new transparency register?
The LETA forms part of the strengthening of Switzerland’s framework for combating money laundering and financial crime, as well as the implementation of international standards on the transparency of legal entities. It has a twofold objective: to improve the identification of the persons who effectively control legal structures and to enable the competent authorities to access this information more quickly.
The reform is based on a federal register, which can be consulted online by numerous authorities, and in which entities subject to the LETA must declare their BOs. This applies in particular to public limited companies (SA), private limited companies (Sàrl), cooperatives, SICAVs, SICAFs and limited partnerships for collective investment schemes. Certain foreign legal entities also fall within the scope of the Act.
What information will companies be required to provide?
Companies subject to the ACT – the vast majority of which are the 600,000 SAs and Sàrls – will be required to identify their BOs. The law requires them to verify the identity and status of BOs with the diligence required by the circumstances. These companies will have to collect and retain the relevant information and report it to the transparency register. The nature and extent of the control exercised form part of the information to be provided. The same applies to any changes.
Determining the BO can prove complex where ownership of an entity is not direct. Under the LETA, the BO is the natural person who ultimately controls the company, either alone or in concert with third parties, in particular through an interest representing at least 25% of the capital or voting rights, or “in any other way”. The ordinance implementing the LETA (LETO) specifies the indicators that may characterise such control, including certain veto or appointment rights, agreements between shareholders or partners, options or fiduciary relationships.
If no person meets the legal criteria defining the BO, the most senior member of the governing body is deemed to be the BO.
What about foreign companies managed from Switzerland?
The LETA is not limited to Swiss entities. Certain foreign legal entities are also subject to the Act where (i) they have a branch registered in the Swiss Commercial Register, (ii) their effective management is in Switzerland, or (iii) they own or acquire immovable property in Switzerland within the meaning of the ANRA (Federal Act on the Acquisition of Immovable Property in Switzerland by Foreign Non-Residents).
The category of companies with their effective management in Switzerland warrants particular attention. In this regard, the LETO refers to the concept of a registered office or effective management in Switzerland within the meaning of tax law. These companies will be required not only to identify and report their BOs, but also to appoint a representative or designate an address for service in Switzerland, and to keep a list of their interest holders in Switzerland.
For the portfolio manager, the difficulty lies in the very nature of the criterion: according to the case law of the Swiss Supreme Court, the place of effective management is where decisions concerning day-to-day operations are taken and where the company is actually managed. A foreign company may therefore fall within the scope of the LETA without its status under the law being as immediately identifiable as that of a Swiss company entered in the commercial register.
What is the impact of a trust within a company’s chain of control?
The law does not impose any specific reporting obligations on trusts. However, where a chain of ownership or control involves at least two intermediaries, a trust or a fiduciary relationship, the entity subject to the LETA must document this chain. If the chain of control involves a trust, the entity subject to the Act must identify the trust’s relevant BOs, who, according to the Act, are: the settlor, the trustee, the protector, the beneficiary(ies), and any other person who controls the trust in any other way.
For example, a company subject to the LETA and held by a trust will be required to report information concerning the trust’s BOs to the transparency register. By contrast, the Swiss trustee of a trust that merely holds an account in Switzerland will not be subject to such obligation.
The situation is different where the trust is considered on a standalone basis. The LETA requires trustees domiciled or having their registered office in Switzerland, or administering a trust in Switzerland – where they are not already subject to the AMLA – to identify and verify the trust’s BOs and to retain this information. However, in such a case, the trust’s BOs do not need to be reported to the transparency register. The trustee is simply required to record and retain the information.
This differentiated treatment of the obligations imposed on the company and those imposed on the trustee means that, where a trustee holds a bank account in its capacity as trustee of a trust, it is not required to disclose the names of the trust’s BO to the register. By contrast, where the bank account is held by the trust through a Swiss company, or through a company whose effective management is in Switzerland, that company is required to disclose the names of the trust’s BO to the register.
Can the portfolio manager rely on the transparency register?
Yes, but subject to certain conditions. Entries in the register are declaratory and do not have constitutive effect. The law nevertheless provides that a financial intermediary may rely on them where an examination of the BOs carried out in accordance with the AMLA, with the diligence required by the circumstances, reveals no anomalies.
The register therefore does not replace the AMLA due diligence procedures: it complements them. The law allows financial intermediaries to consult it to the extent necessary to fulfil their AMLA obligations, without, however, establishing a general obligation to consult it systematically at the start of each client relationship or during periodic reviews. That said, the absence of such a general obligation does not mean that consulting the register is always optional: depending on the circumstances and the level of risk associated with the business relationship, the general duty of diligence incumbent upon the financial intermediary under the AMLA may require consulting the register in order to verify or supplement the relevant information regarding the BO.
It is precisely the comparison between the information in the register and that collected by the portfolio manager that may reveal a discrepancy.
Must every discrepancy be reported?
No. From 1st April 2027, the portfolio manager must report a discrepancy when it is likely to cast doubt on the accuracy, completeness or currency of the information relating to the BO and when it persists after the client has been contacted and given a reasonable period of time to resolve it.
In particular, the LETO excludes differences arising from the distinct definitions of the BO under the AMLA and the LETA, mere formal variations, or certain discrepancies concerning the chain of control that do not call into question the information relating to the BO.
Where reporting is required, it must be made within 30 days. This period begins to run upon the expiry of the time allowed for the client to resolve the discrepancy, or upon receipt of a response that fails to resolve it.
Thus, the new register does not exempt the portfolio manager from understanding their client’s structure. Rather, it provides them with a new point of reference: one that is sufficiently reliable to be used when nothing gives rise to doubt, but which must be cross-checked against the information gathered as part of their AMLA due diligence obligations, particularly where trusts, complex chains of control or foreign companies are involved.
Frédérique Bensahel
Partner, Geneva
Banking and Finance (Head of practice)
&
Julien Le Fort
Associate, Geneva
