Swiss regulator to ease rules for fintech firms

The Swiss Financial Market Supervisory Authority (Finma) is planning to loosen antimoney laundering rules for smaller financial technology firms, part of a drive to boost innovation and shore up the country’s position as a leading money management hub.

The revisions, prompted by a new “fintech” licensing category carved out by the parliament in June, will clarify how nonbanks applying for the new licence must ensure due diligence.

“As a rule, all financial institutions are subject to similar duediligence requirements relating to combating money laundering. However, as most fintech licence applicants are likely to be smaller institutions, Finma proposes to introduce some organisational relaxations for such institutions,” the financial supervisor said on Tuesday.

Its proposal defines small institutions as those with gross revenues of less than Sf1.5m. Under its terms small institutions, unlike banks, would not for instance have to establish an independent antimoney laundering unit with monitoring duties, the regulator said.

The move comes after Switzerland’s parliament voted in June to amend the Swiss Banking Act, creating a new fintech licence category to ease rules imposed on financial endeavours that take in funds and provide certain bank-like functions, but do not make money by investing or receiving interest on the funds.

Switzerland, the world’s largest centre for offshore wealth, has gained prominence in recent years as a hub for financial technology providers, such as banking software groups Temenos and Avaloq, as well as cryptocurrency projects.

But advocates have warned that as banks face increasing margin pressure and tougher competition from technological rivals, more must be done to promote innovation if Switzerland is to remain a leading financial hub.

The new licence, intended to promote financial innovation, will apply to groups that accept public deposits of up to Sf100m, but do not invest the funds or pay interest.

It will likely have the biggest immediate effect on activities such as crowdfunding, which under current rules could often require a banking licence.

Cryptocurrency projects, which often fall under antimoney laundering or securities regulations under Finma’s guidelines, but do not require a banking licence, are unlikely to be affected.

THE LICENCE … WILL APPLY TO GROUPS THAT ACCEPT PUBLIC DEPOSITS OF UP TO SF100M, BUT DO NOT INVEST THE FUNDS