AML Regulation | Financial Services Regulation |
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Substance in Switzerland is generally required including for “mere” AML-type of license/registration. | - A Fintech license requires compliance/risk functions to be implemented (but can be outsourced to a qualified third party if supervision is ensured).
- A banking license and other “heavy” licenses, such as the securities firm, DLT trading facility and banking license also require a risk/compliance function; in addition, corporate governance must also be implemented and financial requirements will apply (minimum capital and capital adequacy apply, including liquidity ratio, unless exemption is available).
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Among other conditions, the prerequisites for obtaining a banking license are:
- fully paid-up minimum capital of at least CHF 10 million;
- effective management of the bank from Switzerland;
- separation of board of directors and executive management;
- effective separation of internal functions – in particular lending, trading, asset management and settlement;
- effective internal control systems, internal audit function independent of executive management;
- applicants under foreign control (additional licensing requirement if the bank is controlled by a foreign shareholder): reciprocal rights on the part of the countries where qualified participants are domiciled;
- if the bank is part of a financial group: adequate consolidated supervision by a recognized supervisory authority.
Among other conditions, the prerequisites for obtaining a Fintech license are:
- fully paid-up and permanently held minimum capital of 3 percent of the accepted public deposits and the accepted crypto-based assets held in collective custody, but at least 300,000 Swiss francs;
- effective management of the FinTech from Switzerland;
- at least one third of the members of the board of directors must be independent of the executive management;
- effective internal control systems, independent of the profit-oriented business within the company;
- applicants under foreign control (additional licensing requirement if the FinTech is controlled by a foreign shareholder): reciprocal rights on the part of the countries where qualified participants are domiciled;
- if the Fintech company is part of a financial group: adequate consolidated supervision by a recognized supervisory authority.
Facilitated regulatory requirements for a Fintech company, compared to a bank include:
- Accounting and financial reporting.
- Accounting for Fintechs is governed exclusively by the provisions of the Code of Obligations. Accordingly, bank-specific regulations such as Art. 6 et seq. BA and Art. 25 et seq. BO do not apply to them.
- Audit under the law of obligations.
- Fintechs must have their annual financial statements and, if applicable, their consolidated financial statements audited in accordance with the provisions of the CO.
- Supervisory audit:
Fintechs may be audited by persons for whom less stringent admission requirements may apply compared to bank auditors. However, this facilitation only concerns the selection of the audit firm. The audit obligation within the meaning FINMASA exists nevertheless. - Capital adequacy and deposit insurance:
Fintech companies are not subject to the provisions of the Capital Adequacy Ordinance or the Liquidity Ordinance. Thus, in principle, only 3% of public deposits and collectively held crypto-based assets, but at least CHF 300,000, are mandatory as minimum capital. However, the BO allows FINMA to impose a higher minimum capital requirement in individual cases if this appears to be necessary. - Deposit insurance:
Fintech companies do not have to join Esisuisse as a self-regulation for deposit insurance and are exempt from the higher liquidity requirements applicable to deposit insurance. However, they must clearly communicate this exemption to customers before they make deposits.
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