LETA requires companies not only to identify their beneficial owners, but also to verify their identity and status with the due care appropriate to the circumstances. Unlike the 25 per cent threshold, there is no measurable boundary for this. This article explains why the legislator deliberately created room for discretion, what determines the appropriate scope of verification and which indicators trigger additional clarification. It also shows what route is available if verification fails and why documentation becomes the actual evidence of due care.
On 1 October 2026, the Federal Act on the Transparency of Legal Entities and the related Ordinance enter into force (Art. 71 LETO). From that date, Swiss companies must not only identify their beneficial owners and report them to the transparency register. They must also verify the identity of those persons and their status as beneficial owners “with the due care appropriate to the circumstances” (Art. 7 para. 2 LETA).
Anyone reading this wording will look for a definition. For the beneficial owner, the legislator provides one: it sets participation thresholds, specifies the forms of control and provides a subsidiary fallback rule (Art. 4 LETA, Arts. 1 to 3 LETO). It does not do the same for the required degree of due care. Neither the Act nor the Ordinance states which verification steps must be carried out, which supporting documents are sufficient or when a verification can be regarded as complete. Both set a standard and leave its application to the company.
This article seeks to close that gap. It brings together the scattered indications in the Act, the Ordinance and the Federal Council Dispatch and translates them into a practicable framework. It explains what determines the appropriate scope of verification, which warning signs trigger additional clarification, what route is available if verification fails, and how the decisions taken can be substantiated vis-à-vis the Control Authority.
Table of contents
- Identification and verification are two separate obligations
- Why the threshold is measurable but due care is not
- What determines the appropriate scope of verification
- Cooperation by the persons involved is part of the system
- When verification is unsuccessful
- Documentation is the evidence of due care
- Who is responsible and what the Control Authority examines
- Conclusion
Identification and verification are two separate obligations
LETA distinguishes between two steps. In the first step, the company must identify its beneficial owners and obtain their first and last names, date of birth, nationality, address and country of residence, as well as the required information on the nature and extent of the control exercised (Art. 7 para. 1 LETA). In the second step, it must verify the identity of those persons and their status as beneficial owners with the due care appropriate to the circumstances (Art. 7 para. 2 LETA).
The second step involves two separate questions. The first is whether the person reported is in fact the person they claim to be. The second is whether that person is in fact the person who ultimately controls the company. In practice, the second question is the more demanding one because it cannot be answered by an identity document. The company must be able to understand the basis on which the person qualifies as a beneficial owner.
To fulfil this obligation, the company requires shareholders, beneficial owners or other third parties to provide the relevant supporting documents (Art. 7 para. 2 LETA). A small part of this work is standardised at Ordinance level. The company must establish whether the person concerned has an OASI number and, if not, obtain a copy of their passport, identity card or foreign national identity card (Art. 10 para. 2 LETO). The standardisation ends there, however. The company itself decides how far it verifies beyond this point.
Why the threshold is measurable but due care is not
When determining who qualifies as a beneficial owner, the Act works with clear parameters. A beneficial owner is any natural person who, directly or indirectly, alone or acting in concert with third parties, holds at least 25 per cent of the capital or voting rights or controls the company by other means (Art. 4 para. 1 LETA). The Ordinance takes this logic further and requires the participation to be assigned to one of three ranges: at least 25 per cent up to and including 50 per cent, more than 50 per cent up to and including 75 per cent, and more than 75 per cent (Art. 13 para. 1 LETO). In the case of indirect participation, the relevant question is whether more than 50 per cent is held through the interposed legal entities (Art. 2 para. 2 LETO). Such thresholds can be calculated. Either they are met or they are not.
The verification obligation works differently. It is framed as a duty of care, and the company itself determines the scope of the verification. Relevant factors include the information available to it, any doubts as to the accuracy of that information, and any indications that another person controls the company. The Federal Council Dispatch on LETA expressly states that a risk-based approach is justified, that the company does not have to achieve certainty, and that determining identity is not subject to an obligation to achieve a specific result. The legislator deliberately refrained from prescribing strict verification measures or documents in order to allow a proportionate approach and avoid unnecessary administrative burden for companies.
For practical purposes, this changes the question. It is not whether a threshold has been complied with, but whether the level of verification chosen was reasonable in the specific circumstances. Discretion does not mean arbitrariness. It means that a decision must be taken and that the decision should be capable of being justified.
What determines the appropriate scope of verification
According to the Federal Council Dispatch, the scope of the verification obligation depends on the specific circumstances. These circumstances can be divided into three groups that are useful in practice.
Simple circumstances justify lean verification
An SME that has known all its shareholders for a long time will, in view of the low risks, generally not need to take any special measures to verify the identity of its beneficial owners. The same applies to a company whose shareholders consist of persons who work for the company or sit on its board of directors. In a single-shareholder corporation, the Federal Council Dispatch states that a self-declaration by the sole shareholder is sufficient. The company may also accept individual details without further clarification. The address provided by the beneficial owner may generally be accepted as long as it does not appear implausible, and no query with a register or public authority is required for that purpose.
Complex structures require significantly more
The more complex the overall structure and the more difficult it was to obtain information about the beneficial owner, the more extensive the verification and supporting evidence must be in order to make the control structure understandable. As a counter-example to the simple SME scenario, the Federal Council Dispatch refers to a domiciliary company indirectly held by several foreign trusts and to a legal entity controlled by different persons through profit-participating loans. Shareholders acting in a fiduciary capacity also increase the amount of work required.
The Ordinance provides a useful point of reference. Information on the individual links in the chain of control must be obtained if the chain includes at least two interposed natural persons, legal entities or trusts, if it includes at least one trust or fiduciary relationship, or if measures to freeze funds and economic resources have been imposed on a beneficial owner under the Embargo Act or the Federal Act on the Freezing and the Restitution of Illicitly Acquired Assets held by Foreign Politically Exposed Persons (Art. 15 para. 1 LETO). Anyone dealing with one of these constellations is no longer within the realm of a simple self-declaration.
Indicators that trigger additional clarification
Irrespective of the structure, day-to-day circumstances may reveal indications that make further steps necessary. The Federal Council Dispatch identifies three typical observations.
- Dividends are paid into an account that does not belong to the shareholder who was reported as the beneficial owner.
- The board of directors regularly receives instructions from a person who has not been reported as a beneficial owner.
- A shareholder that is a legal entity refuses to cooperate, even though the company knows that shareholder’s legal ownership.
Such observations cannot be dismissed by pointing to compliance with a threshold. They concern the second question under Art. 7 para. 2 LETA: whether the person reported really is the person who controls the company. Ignoring them takes the company outside the bounds of reasonable discretion.
Cooperation by the persons involved is part of the system
The company is not alone in carrying out the verification. Anyone who, alone or together with third parties, holds ownership interests to an extent that enables ultimate control must report the beneficial owner to the company (Art. 13 para. 1 LETA). At the company’s request, shareholders must also provide the information or supporting documents needed to verify the identity and status of the beneficial owner (Art. 13 para. 4 LETA). Beneficial owners and third parties involved in the chain of control are themselves required to cooperate (Art. 14 para. 3 LETA). Anyone who intentionally breaches these reporting obligations is liable to a fine of up to CHF 500,000 (Art. 43 let. a LETA).
This leads to a practical point for the board of directors. The company must actually request cooperation, and it must be able to demonstrate that it did so. A request that can be shown to have been made but remained unanswered is legally different from a request that was never made. According to the Federal Council Dispatch, to fulfil its duty of care the company must do everything that can reasonably be expected of it to obtain the necessary information.
When verification is unsuccessful
Because there is no obligation to achieve a specific result, the Act provides an orderly procedure for cases in which verification fails. If the company is unable to identify the beneficial owner or to verify that person’s identity or status satisfactorily, it documents that fact and the steps it has taken (Art. 8 para. 2 LETA). It must also state this in the report and transmit all relevant information available to it, including the name of the most senior member of the governing body (Art. 9 para. 3 LETA).
The Ordinance specifies what must be reported in such a case. This includes the relevant information available, including information on any chain of control and on shareholders who have failed to comply with their obligations (Art. 21 para. 1 let. a LETO). If a company has several beneficial owners and was able to verify only some of them, it reports the complete information for that part and, for the remainder, the information relating to the unsuccessful verification (Art. 21 para. 2 LETO).
Such a report is not without consequences. If the legal entity states that it was unable to complete the identification or verification, the register-keeping authority adds a note to the register entry (Art. 34 para. 1 let. c LETA). The note indicates that there are doubts as to the accuracy, completeness or currency of information (Art. 34 para. 2 LETA), and following a preliminary review the Control Authority decides whether to initiate control proceedings (Art. 36 para. 1 LETA). This is precisely where the difference becomes apparent between a serious, documented verification that nevertheless proved unsuccessful and a verification that was never carried out at all.
Documentation is the evidence of due care
Because there is no measurable threshold, the evidence shifts to the documentation. The company must document the information obtained, ensure that it is kept up to date and ensure that it can be accessed in Switzerland at all times (Art. 8 para. 1 LETA). The information and supporting documents must be retained for ten years after the person concerned ceases to qualify as a beneficial owner (Art. 8 para. 3 LETA). In the case of corporations, the person referred to in Art. 718 para. 4 CO must have access to the documented information (Art. 8 para. 4 LETA).
There are no formal requirements. Companies may choose the format that best suits their corporate structure and the complexity of the circumstances. According to the Federal Council Dispatch, the decisive point is that the information can be inspected without disproportionate effort. A company that wants to keep the information continuously up to date will sensibly maintain it where the ownership structure is also recorded. A structured digital share register that brings together transactions, participation ratios and the associated supporting documents in one place meets this requirement without creating a separate filing system. At Konsento, a dedicated Transparency Register Reporting Tool complements this basis and prepares the information for the report.
Who is responsible and what the Control Authority examines
Reports to the register must be made by the most senior member of the governing body. That person may delegate the task to other persons within the company or to third parties, but remains responsible for the proper filing of the report (Art. 12 LETA). The task can therefore be delegated; responsibility cannot.
The Control Authority reviews the accuracy, completeness and currency of the information in the transparency register on a risk-based basis or by way of random checks (Art. 35 paras. 1 and 2 LETA). In control proceedings, the legal entity, its shareholders, third parties involved in the chain of control and the beneficial owners must provide the necessary information and supporting documents (Art. 37 para. 1 LETA). If the Control Authority finds that information is incorrect, incomplete or not up to date, it takes the measures necessary to restore compliance and may, in the event of repeated breaches, suspend the participation and property rights of the shareholder concerned (Art. 38 paras. 1 and 2 LETA).
The criminal provisions are also worth noting. They cover intentional breaches of reporting obligations as well as false statements made to the Control Authority (Art. 43 LETA), and anyone who intentionally fails to comply with a final and binding order of the Control Authority is liable to a fine of up to CHF 100,000 (Art. 44 LETA). The duty of care under Art. 7 para. 2 LETA is not separately listed in this catalogue. That does not, however, relieve the board of directors: a superficial verification may result in incorrect information being reported, and that is precisely where the control regime and its consequences come into play.
Conclusion
Verification of beneficial owners is the obligation under LETA that cannot simply be ticked off. Who qualifies as a beneficial owner is determined by thresholds and control criteria that can be calculated and evidenced (Art. 4 para. 1 LETA, Arts. 1 to 3 LETO). By contrast, how far the corresponding information must be verified depends on the circumstances of the individual case and on the company’s own assessment (Art. 7 para. 2 LETA).
For the board of directors, this means three things. It should consciously determine the scope of verification rather than leaving it to chance. It should take seriously any indications that contradict the information reported. And it should document the steps taken in a way that remains comprehensible years later (Art. 8 paras. 1 to 3 LETA). A company with a straightforward shareholder structure will have little work to do. A company with fiduciary shareholdings, foreign interposed companies or contractually conferred control should not leave its preparations until the final weeks before the staggered transitional periods expire (Art. 51 LETA).
If you want to know how thoroughly your company needs to verify, start with your own structure. Record who exercises control, through which route, which information you can already substantiate today and where you depend on the cooperation of third parties. The better the ownership structure is maintained on an ongoing and structured basis, the less the verification becomes a separate project – and the more naturally the documentation is created that can demonstrate the required due care if it is ever challenged.