Financial self-regualtion in Switzerland

January 3, 2023

Swiss – is a highly popular jurisdiction among EU Fintech companies. Thanks to good biz conditions, namely: low taxes, availability of benefits, support from the authorities, many technology start-ups and experienced corporations have opened their offices here. They are especially attracted to the canton of Zug, which has even received the unofficial nickname of the β€œCrypto Valley” of Switzerland. But, when planning to register a Fintech company in Switzerland, businessmen are advised to first familiarize themselves with the basic rules governing the local Fintech sector.

Basic information about Financial regulation in Switzerland

In the Global Modern Usage Index 2020, the country ranks 1st, which indicates the high achievements of the jurisdiction in the field of modern usage. The country has created very favorable conditions for Fintech businesses, in particular: access to low-cost loans and venture capital, educated personnel, widespread use and availability of innovative communication and information technologies.

In 2019, investments in the Fin-technology sector increased by 91.8% compared to 2018 and reached 360.3 million CHF, while the volume of funds raised during the funding rounds amounted to 3 million CHF. As of early 2020, there were more than 200 active companies in the Swiss Fintech ecosystem, although the actual number of people employed in this area is much higher.

Most Fintech companies in Switzerland are focused on the following areas:

  • payment services;
  • investment management;
  • banking infrastructure;
  • deposits and lending;
  • distributed ledger technology.

Interesting fact that Switzerland, UK, Lichtenstein financial capitals are more interested in offshore zones than EU regulation.

Company registration

Enrollment of a company in a country is considered a promising option for foreign entrepreneurs, since this jurisdiction has a reputation as a developed European financial center. The article discusses not only the financial regulatory authorities in Swiss and the current legal framework, but also the intricacies of deposit activities.

Regulation of financial activities in Switzerland

The Swiss FINMA is the master regulator for all types of money services. The National Bank also has certain supervisory powers over systemically main establishments. Moreover, Swiss financial services regulations are heavily dependent on the rules set by various self-regulatory organizations.

The scope of FINMA regulation includes:

  • all models of fiscal services;
  • Banking services;
  • securities trading in Switzerland;
  • stock services and monetary market infrastructure.
  • Self-Regulatory Organizations are responsible for supervising organizations not controlled by FINMA.

Audit demands

There are auditors who are supervised and appointed by FINMA. Based on the reviews of these auditors, FINMA may decide to issue recommendations, schedule follow-up reviews or implement other measures to ensure compliance with financial regulations in Switzerland. But there is another way to obtain information about unauthorized activity. For example, third parties, investors, market participants may report violations to FINMA, which may result in an official investigation.

FINMA’s administrative measures include:

  • preliminary injunctions;
  • directing the supervised institution to restore compliance with the law;
  • prohibition of persons to engage in professional activities;
  • revocation of licenses;
  • an order to liquidate monetary institutions.

The internal auditor should report directly to the board of directors or the audit committee and perform audit and monitoring duties. In particular, this means that he has an unrestricted right of verification, access to information and audit in a regulated financial business-company in country. The key function of internal audit is to assess risks in the organization’s activities.

If you are interested in resolving disputes in the financial services industry in Switzerland, please note that the FDF handles criminal offences. Its decisions can be challenged by filing a lawsuit in the Federal Criminal Court and then in the Federal Supreme Court.

Financial regulatory bodies in Switzerland

  • FINMA controls the money market and its participants. Sets licensing demands. A special FinTech division has been created in the structure of the sector.
  • Financial regulatory body in Switzerland – Fintech companies in Switzerland that are financial intermediaries and fall under the anti-money washing law (ALMA), but are not controlled by FINMA, are required to become self-regulatory organizations;
  • controlling organization – Fintech companies providing asset management services are required to obtain a FINMA license and become an affiliated member of an independent controlling organization. The latter carry out constant supervision of such companies;
  • Also there is a body part that regulates and warranty ensures data protection. The cantons are required to establish financial data protection authorities at the regional level to oversee the proceeding of info by the regional and communal authorities;
  • Criminal services – in Swiss, not only FINMA has control over the financial market and the right to apply administrative sanctions, but also the competent authorities: the Federal Section of Finance, the Prosecutor General’s Office, cantonal prosecutors, if the violation falls under criminal law.

Regulation of financial services in worldwide business

The Swiss joint-stock company is rather liberal in the category of international financial services. Generally, financial services (banking, securities brokerage or investment advisory) may be offered on an international basis. If a foreign financial company is physically dealing with local staff, then it should get justice. If investment activities are carried out in relation to the Swiss invaders, authorization of the investment product is required. Registered outside the country but offering financial services to international financial clients covered by FinSA.

Conclusion

It is important that the takeover attracts a favorable climate for investment activity. Both the retail investor and the financial services company are sufficiently protected in this country. If you need advice on the regulation of financial activities in the Ministry of Finance, attention is with us. We are ready to offer you the necessary range of related services.

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