What activities may Swiss Financial Intermediaries Companies Carry Out

In this article, we will go over the basics of Swiss Financial Intermediaries, their regulations along with the differences between SRO and FINMA supervision. You'll also learn what some of the activities are that Swiss Financial Intermediaries undertake if you're planning on a business venture and aren't sure which projects you can manage.

If you're looking to develop a Swiss intermediary business or wish to purchase a preexisting company then don't hesitate to reach out to our legal team for some assistance.

In Swiss law, there are separate regulation frameworks for both Special Financial Intermediaries and Other Financial Intermediaries. Special Intermediaries can include banks, gaming houses, stockbrokers and insurance companies. Other Intermediaries, on the other hand, can include asset management, FX, money remittance and payment and credit providers.

In Switzerland, Special Financial Intermediaries require a license and authorisation from FINMA to operate, whereas Other Financial Intermediaries can operate with supervisions from FINMA or as an SRO.

The principal rationale behind these two major differences in regulation comes down to the Swiss Federal Act on Combatting Money Laundering and Terrorist Financing, or the AMLA. This Act was introduced on October 10th 1997 and has been in action ever since. To meet the requirements set out by the AMLA Act Special Intermediaries must obtain a license from FINMA and also be authorised in accordance with all operations. An Other Financial Intermediary simply needs to choose between being an SRO (self-regulatory organisation) or be directly supervised by FINMA to ensure it complies with all laws.

An SRO's primary role is to define which due diligence procedures are required to be undertaken in order to meet the standards outlined under the AMLA. It's also vital that all operations within the financial intermediary comply with these standards. Every SRO must also develop directions which allow intermediaries and their affiliated partners to meet all of these anti-money-laundering obligations.

An SRO is also subject to supervision by FINMA, which is the governing body that monitors them.

FINMA will recognise an organisation as an SRO if it:

• • Develops a set of rules which allow the company and its members to follow regulations set out by the AMLA,
  • Continues to observe for AMLA compliance,
  • Ensures that everyone in control of enforcing these controls is compliant and follows correct business conduct and holds appropriate qualifications

Similarly to Special Financial Intermediaries, an intermediary being supervised by the SRO is quite the same as being supervised by FINMA. That means the Other Financial Intermediary is exposed to the exact same supervision as any other financial intermediary.

This supervision is highlighted once a company begins being supervised by an SRO. The company name will be immediately sent to FINMA and you'll be able to find the company listed on the FINMA SRO Member website. Sometimes this process can take up to 30 or even 60 days to take place, so don't be concerned if your company name hasn't been listed right away.

In summary, regulation and supervision for both Special and Other financial intermediaries are exactly the same.

In article 2 paragraph 3 of the AMLA the different service is listed as:

1. Carrying out transitions relating to consumer loans, commercial financing, leasing and mortgages
2. Providing services which relate in some way to payment transactions, including electronic transactions on behalf of other parties
3. Trading their accounts or the accounts of a third party, to be exchanged for banknotes, market instruments, precious metals, securities, stocks and derivatives
4. Managing assets
5. Making investments as an advisor
6. Holding or managing securities

One of the biggest advantages begins with the capital requirement. The Swiss capital requirement for a Swiss Intermediary company is lower than in the EU and requires only a 100,000 CHF capital payment, of which only 50,000 CHF is required upfront.

The second major advantage is the fact that Other Financial Swiss Intermediaries are allowed to trade for both their own accounts and the accounts of others. In the EU, for a company to be able to do that there is a massive capital of 750,000 CHF required.

Unfortunately, as Switzerland isn't a part of the European Union an intermediary can't be passported, though this isn't a major issue thanks to the fact that the Swiss government allows financial intermediaries to work seamlessly with clients worldwide, even those in the European Union despite the fact that the companies can't be passported.

If you or your business needs some assistance in the launch of a Financial Intermediary in Switzerland then feel free to reach out to the Goldblum and Partners team. We have a range of resources available and are experts in financial law.