The Federal Council recently released a comprehensive report on the inclusion of blockchain technology within the Swiss legal framework – in particular, the Swiss banking regulations. With this comprehensive report, the Swiss government has confirmed its established approach of applying Switzerland's existing and principle-based laws in a technology-neutral way. However, it also acknowledges that the existing legal framework will require punctual amendments to solve specific issues.
From 1 January 2019 companies that operate beyond the core activities characteristic for banks will be able to accept public funds of up to Sfr100 million on a professional basis subject to simplified requirements. During its recent meeting, the Federal Council set into force an amendment to the Banking Act to promote innovation in the fintech area and to remove barriers to market entry for fintech firms.
Parliament recently passed the bills of the new Financial Services Act and Financial Institution Act. These laws will have a significant impact on the Swiss banking and financial market landscape, as well as the applicable rules for providing banking and financial services both within and on a cross-border basis into Switzerland. This article provides a short overview of the new concept of 'client advisers' and the foreseeable implications of the new rules for banks and other financial service providers.
The Swiss Bankers Association recently published new guidelines for its member banks, including recommendations on how to treat and onboard blockchain companies for ordinary corporate bank accounts. As Switzerland has strict laws and due diligence requirements in place governing financial transactions, banks must carry out careful checks when opening an account, particularly for companies with links to blockchain and initial coin offerings.
Swiss authorities are building a financial regulatory regime which considers the most important recommendations from the Financial Action Task Force's mutual evaluation report on Switzerland. To this end, the Federal Council has initiated a consultation on amendments to the Anti-money Laundering Act and the Swiss Banking Association has published its revised agreement on Swiss banks' code of conduct regarding the exercise of due diligence.
The European Parliament and the European Council recently expanded the scope of the EU anti-money laundering and combating the financing of terrorism regulations to cover cryptocurrencies and virtual currencies. While the directive will not apply directly to Switzerland, Swiss financial regulators remain ahead of the curve. Since 2016, the Financial Market Supervisory Authority has widened the scope of certain banking regulations relating to money transmitting and remitting services to cover virtual currencies.
The Swiss Financial Market Supervisory Authority (FINMA) recently published a supervisory notification on token sales and initial coin offerings (ICOs). It also announced that it was examining whether several ICOs or their corresponding business models violate supervisory provisions. A FINMA press release cited the marked increase in ICOs carried out in Switzerland in recent months as a reason for its action.
The revised Banking Ordinance of April 30 2014 regarding new financial technology (fintech) regulations recently entered into force. The purpose of the proposed revisions is to enhance the competitiveness of Switzerland as a major fintech hub and to create an appropriate regulatory framework for fintech companies providing services outside traditional banking business by taking into account the specific risk-profile of their business models and service offering.
The Federal Council recently adopted an amendment to the Banking Ordinance scheduled to enter into force on August 1 2017. Following the announcement of the revised rules, the Swiss Financial Market Supervisory Authority published a guidance note regarding the new rules on public deposits. The revision will reduce some of the barriers to market entry for financial technology firms.
The Federal Council recently initiated a consultation procedure on new financial technology (fintech) regulations. The revised provisions ensure that barriers to market entry for fintech firms are reduced and that Switzerland's competitiveness as a financial centre is maintained. The consultation will end on May 8 2017. The proposed amendments to the Banking Act and the Banking Ordinance aim to ease the regulatory framework for innovative fintech companies, while taking into account potential risks.
When the Financial Market Infrastructure Act and the Financial Market Infrastructure Ordinance came into effect, specific transitional periods were granted to fulfil new duties, as well extended record-keeping duties for banks as participants on trading venues regarding securities transactions. As organised facilities that are not subject to authorisation may be operated only by banks, securities dealers, stock exchanges or multilateral trading venues, these changes will affect banks significantly.
According to the Banking Act, several financial technology business models carry out some sort of banking business where a full banking licence would be too expensive and would not reflect the business model properly. As a result, the Financial Market Supervisory Authority supports a new licensing category for financial innovators carrying out some banking activities, but with limited acceptance of client assets and no lending activity.
Switzerland recently decided to facilitate the financing activities of groups operating in or out of Switzerland by easing some restrictions under the Withholding Tax Ordinance. The amendment of the ordinance is meant to strengthen the establishment of headquarter activities with further central corporate functions, as well as treasury activities, particularly those performed outside Switzerland.
The Federal Council recently agreed to push back the effective date for derivative transaction reporting duties for small non-financial counterparties to 1 January 2024 and extend the corresponding transitional period. The corresponding amendment to the Financial Market Infrastructure Ordinance will enter into force on 1 January 2019. The reporting duties already in force for other market participants are unaffected.