Fintech permit: FINMA opens hearing on AMLO-FINMA

The Financial Market Supervisory Authority (FINMA) has opened the hearing on the selective revision of the FINMA Money Laundering Ordinance (AMLO-FINMA, SR 955.033.0), which runs until 26 October 2018. The reason for the revision is the new Fintech license created in June 2018, which has its legal basis in Art. 1b of the Banking Act (SR 952.0).

FINMA aims to grant organizational simplifications in connection with the FINMA Money Laundering Ordinance to small Fintech companies that have been granted a Fintech license and that provide services outside the typical banking business, subject to certain thresholds. The Fintech license is used by institutions that accept public deposits of up to CHF 100 million without investing or paying interest on them.

Under the proposed revision, due diligence obligations aimed at combating money laundering will continue to apply to all financial institutions, however licensed Fintech companies will be granted certain relief similar to that afforded to Directly Subordinate Financial Intermediaries (DSFI) reporting directly to FINMA. However, since future FinTech licensees will receive public deposits and thus carry out a riskier activity, not all the relief extended to DSFIs will be included.

The intended deviations from the DSFI regulations are briefly explained below:

  • According to Art. 13 AMLO-FINMA, financial intermediaries establish risk criteria that indicate business relationships with increased risks. Art. 13 AMLO-FINMA shall apply to future FinTech licensees irrespective of the number of business relationships.
  • Small institutions do not have to set up an independent money laundering department with control tasks. This relief will apply to institutions with gross in-come of less than CHF 1.5 million and proof that they have a low-risk business model. The money laundering agency of the exempted institutions must therefore only perform the tasks according to Art. 24 AMLO-FINMA. These tasks may also be performed by the Executive Board or a member of the Executive Board.
  • Finally, future FinTech licensees should be obliged without exception to issue internal instructions, in accordance with Art.26 AMLO-FINMA (in contrast to DSFI that meet certain requirements).

The Federal Council intends to bring the partially revised Banking Act into force on January 1, 2019. The amendments to the FINMA Money Laundering Ordinance will come into force at the same time, if possible.

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