FinTech License and Anti-Money Laundering: Swiss Compliance
On 15 June 2018, the Swiss parliament created a new licensing category labelled the "Fintech license" via adoption of the Financial Institutions Act (the FinIA). The new law supplemented Swiss Banking Act (the BA) with Article (1b) setting forth that the new license will apply to institutions accepting public deposits not exceeding CHF 100 million in case they do not invest or pay interest on funds deposited. The entities concerned will be obliged to observe the provisions of the Anti-Money Laundering Act (the AMLA). Thus, the FinIA introductions resulted in necessity to revise the FINMA Anti-Money Laundering Ordinance (the AMLO-FINMA) as imposing too stringent requirements for institutions in question.
The point is that the FinIA is aimed to foster Swiss financial sector innovative side. The contradiction stipulated by the AMLO-FINMA runs that all the financial institutions are subject to the same due diligence requirements. However, potential applicants under the Article (1b) BA are predominantly small-size institutions for which such requirements are burdensome and unreasonable. Considering the above, the Swiss Financial Market Supervisory Authority (FINMA) proposed to introduce some organisational relaxations for such entities and launched a pertinent consultation.
For instance, one of the reliefs prescheduled being in line with the principle of proportionality is an exemption from the requirement to establish an independent anti-money laundering unit with monitoring duties (Article 25 AMLO-FINMA) to be granted to license holders. According to FINMA, for the purposes of the draft ordinance "small" institutions are firms with gross revenues below CHF 1.5 million.
The other key point of consultation states that the due diligence requirements applicable to such small entities shall largely be the same as those with regards to directly subordinated financial intermediaries (DSFIs), due to more or less comparable size. In particular, DSFIs as financial intermediaries who are not members of a self-regulatory organisation are subject to the following (in accordance with Article 14 AMLA) conditions:
- be listed in the Commercial Register or be authorized to conduct business otherwise; - possess an appropriate organisational structure and internal regulations to be compliant with AMLA requirements; - deliver proof of compliance with their duties under the AMLA and of proper business conduct, both for individuals entrusted with management and administration functions, and for intermediaries themselves.
The above conditions for DSFIs are not indispensable prerequisite to meet as of the moment of application: the compliance may be ensured further immediately after the license had been granted, however, in such a case the application shall demonstrate that future licence holders are able and intended to do so.
The final date for providing references in course of consultation on the AMLO-FINMA is 26 October 2018. Thereafter, the Federal Council shall implement the partially revised the BA to be effective from 1 January 2019, the amendments to the AMLO-FINMA likely to enter into force at the same time.