Switzerland has announced stricter due diligence regulations for its banks, which include powers to reject illicit funds being deposited or transferred by new and existing customers, according to an official statement from the country's government.

Financial institutions in the country, which have historically been known for their strict secrecy practices, will be required to end relationships with existing clients who have been found to violate these regulations by stashing illegal assets in their accounts.

Switzerland has a long-standing global reputation as a safe haven for allowing individuals and organisations to hoard untaxed assets, but the country has been working hard to change its image by getting rid of banking secrecy practices and by becoming part of a global automatic exchange of tax information framework.

Its decision to roll out the revised regulations now could be related to the fact that there is currently a global crackdown on black money happening, which means scores of foreign nationals with Swiss bank accounts are being probed from their home countries.

The new due diligence requirements, which will cover all banks and financial institutions, have been created to make Switzerland a "tax-compliant financial centre", according to an official statement from the government.

In future, all affected organisations will need to comply with enhanced due diligence regulations when accepting new business and assets, in order to stem the flow of illicit funds making their way into the country.

The Federal Council - the highest decision-making body in Switzerland - has also amended the Anti-Money Laundering Act to cover such issues, meaning all financial intermediaries would be required to put a risk-based assessment in place when accepting assets to ensure all money has been taxed correctly.

"Where a financial intermediary has to assume based on an assessment of this nature that a client is offering untaxed assets, business relationships must be rejected in the case of new clients," the statement explained.

In terms of existing clients, the Swiss government said that an offer of untaxed assets raises the suspicion that those held with the bank already are also untaxed. In this case, the financial institutions would be required to clarify the tax compliance of all assets, using the risk-based assessment.

The statement explained: "If the clarification leads to the assumption that these are actually untaxed assets, then the client must provide the financial intermediary with proof of tax compliance within a reasonable period or regularise the situation."

These requirements will also now be applicable to clients that are not covered by the Automatic Exchange of Financial Account Information.