The financial services industry continues to face mounting regulatory pressures, with increasing expectations for transparency, accountability, and effective risk management. In Switzerland, regulatory authorities such as FINMA are reinforcing their oversight with updated guidance and stricter enforcement. Compliance with regulations like FINMA Guidance 05/2023 and AMLO-FINMA has become essential—not only to avoid penalties, but also to uphold institutional integrity and customer trust.
The challenge
Capco collaborated with a Tier 1 global wealth manager to address significant regulatory challenges posed by FINMA Guidance 05/2023 and AMLO-FINMA. These regulations require Swiss banks to conduct comprehensive, data-driven money laundering risk analyses and define institution-specific risk appetite statements.
A 2023 review by FINMA of over 30 Swiss banks revealed that many lacked even the fundamental components of an adequate money laundering risk analysis—particularly around clearly defined risk tolerances and essential structural elements of the assessment. As per Article 25 para. 2 of AMLO-FINMA, banks must tailor risk analyses to their specific business models and client profiles.
Against this backdrop, the client sought to not only ensure compliance but to elevate their risk management framework to a best-practice level—with full board-level oversight and long-term sustainability.
Our approach
Capco initiated the engagement with a comprehensive gap analysis, benchmarking the bank’s existing practices against FINMA Guidance 05/2023 and Article 13.2 of AMLO-FINMA. This assessment considered the bank’s business model, client base, product suite, internal processes, and existing policies.
We developed an empirical, data-driven model to quantify inherent risks, assess control effectiveness, and determine residual risks. Risk categories were aligned with FINMA criteria (e.g., client types, geographies, and products), with each mapped to relevant controls. Historical data and reports were analysed to validate control coverage and effectiveness. Capco coordinated closely with stakeholders to refine assumptions and input data.
A critical element was the creation of a sustainable framework for ongoing, automated risk assessments and monitoring, governed by the bank’s management and supervisory boards. Over the course of a six-month engagement, our scope expanded to strengthen the client’s control management methodology, introducing structured processes for certification, attestation, and assurance.
Capco worked across all three lines of defence—front office, AFC (Anti-Financial Crime), and internal audit—and collaborated closely with senior leadership, recognizing the strategic importance of risk appetite in protecting the bank’s reputation and profitability.
Value delivered
Capco’s collaboration with the client resulted in the transformation of their financial crime risk management framework. Initially focused on regulatory remediation, the project evolved into the design and implementation of a fully operational, transparent, and empirical risk management system.
Key deliverables included:
- Swiss-specific risk appetite statements (qualitative and quantitative).
- A robust, data-driven risk assessment methodology.
- Clearly defined risk drivers and KRIs.
- Automated processes for assessing and reporting inherent risk, control effectiveness, and residual risk.
- A defined RACI model and senior management supervision and escalation framework.
- Structured processes for control certification, attestation, and assurance across all AFC-relevant areas.
The solution delivered meets all regulatory requirements, is sustainable for future assessments, and has received high praise from external auditors, who called it “best of breed” in the industry.
Client feedback was overwhelmingly positive, commending Capco for the clarity and rigor of the proposed solution, the quality of stakeholder engagement, and strict adherence to timelines. Transparent communication throughout the project enabled early alignment on critical milestones and deliverables.
Senior leadership and auditors recognized the engagement as placing the bank at the forefront of financial crime risk management within its wider group. The client particularly valued Capco’s independent, disciplined, and analytically rigorous approach, noting the confidence it inspired across the organization.