Switzerland has issued broker-dealer licenses to two blockchain companies, as well as a warning. The Swiss Financial Market Supervisory Authority (FINMA), which oversees virtually all financial activity in the country, wants to ensure Switzerland has a clean blockchain industry and has issued new guidance on how blockchain-based companies must adhere to anti-money laundering (AML) and Know Your Customer (KYC) policies in the country – or else.
The guidance covers all virtual assert service providers – exchanges, wallets, brokerages and more. All of the same AML and KYC rules that have been in place for financial entities apply to blockchain companies and attempts to sidestep the guidelines can have dire consequences.
According to the entity’s announcement, “On 21 June 2019 the international body tasked with developing policies to combat money laundering, the Financial Action Task Force (FATF), issued guidance on financial services in the context of blockchain technology. As for traditional bank transfers, information about the client and the beneficiary must be transmitted with transfers of tokens (with the exception of transfers from and to unregulated wallet providers). Only then, for example, can the provider receiving this information check the name of the sender against sanction lists or check that the information provided about the beneficiary is correct.”
FINMA has issued banking and securities dealer licenses to SEBA Crypto AG in Zug and to Sygnum AG in Zurich. Both are expected to offer blockchain-based financial services for professional and institutional customers and these two could serve as guinea pigs for how well the country’s regulatory oversight of the blockchain space functions.
The agency adds, “FINMA has consistently applied the Anti-Money Laundering Act to blockchain service providers since their emergence. In its guidance published today, FINMA provides information about this technology-neutral application of the regulation to payment transactions on the blockchain. Institutions supervised by FINMA are only permitted to send cryptocurrencies or other tokens to external wallets belonging to their own customers whose identity has already been verified and are only allowed to receive cryptocurrencies or tokens from such customers. FINMA-supervised institutions are thus not permitted to receive tokens from customers of other institutions or to send tokens to such customers. This practice applies as long as information about the sender and recipient cannot be transmitted reliably in the respective payment system. Unlike the FATF standard, this established practice applies in Switzerland without the exception for unregulated wallets and is therefore one of the most stringent in the world.”
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