Swiss financial regulator FINMA is planning to soften anti-money laundering rules for smaller FinTech firms in an attempt to help the country become a tougher competitor in the money management sector.
According to Reuters, the change is the result of the government’s decision in June to amend the Swiss Banking Act. As a result, a new FinTech license category was created to loosen rules for financial companies that provide certain bank-like functions, such as taking deposits, but do not generate income by investing or receiving interest on the funds.
“As a rule, all financial institutions are subject to similar due diligence requirements relating to combating money laundering. However, as most FinTech license applicants are likely to be smaller institutions, FINMA proposes to introduce some organizational relaxations for such institutions,” the financial supervisor said in a statement on Tuesday (Aug. 28).
Small institutions are defined by FINMA as firms with gross revenues under 1.5 million Swiss francs ($1.5 million). One of the changes being proposed is that, unlike banks, these smaller companies won’t need to have an independent anti-money laundering unit with monitoring duties.
Switzerland has become well-known in recent years as a FinTech hub, attracting companies such as banking software groups Temenos and Avaloq, as well as cryptocurrency projects. Last month, in fact, it was reported that many crypto firms are flocking to Zug, a small town near Zürich, which is now known as “Crypto Valley.”
But advocates still say that in order to truly compete in the market, there needs to be more innovation in the country. With that in mind, the new license is designed to boost financial innovation, specifically for groups that accept public deposits of up to 100 million francs but don’t invest the funds or pay interest.
The Swiss government expects the amendments to take effect from Jan. 1, and FINMA said its own adjustments should go into effect at the same time.