19th June 2019
Swiss Financial Market Supervisory Authority (FINMA)
With authority over financial markets, FINMA is responsible for ensuring that financial institutions in Switzerland operate in compliance with the law.
The Swiss Financial Market Supervisory Authority (FINMA) was established on 22 June 2007 as a merger of the Anti Money Laundering Control Authority, the Swiss Federal Banking Commission, and the Federal Office of Private Insurance. FINMA is an independent regulatory body with authority over Switzerland’s financial institutions, including banks, insurance companies, exchanges, and investment schemes. It has the mandate to protect both the function of Switzerland’s financial markets and their creditors and investors: in pursuit of this goal, it works to identify and eliminate criminal activities such as money laundering and the financing of terrorism.
As an independent body, FINMA reports directly to the Swiss Federal Department of Finance and is headquartered in the capital city, Bern. FINMA is governed by a parliament-appointed board of directors and currently led by CEO Mark Branson. The board manages FINMA’s budget, defines its strategic direction, and maintains contact with Switzerland’s key financial authorities in order to carry out its regulatory function effectively.
To protect participants in Swiss financial markets from money laundering and other criminal activities, and to ensure the financial industry continues to function correctly, FINMA concentrates on four core tasks:
FINMA is responsible for authorizing and licensing every company that seeks to operate in the Swiss financial sector. The forms of license available to financial institutions vary depending on the type of financial activity they engage in: license types range from a simple FINMA registration to more intensive ongoing prudential supervision.
FINMA takes a risk-based approach to its supervision of financial institutions, working to identify threats that could affect individual institutions or the entire financial system. FINMA is particularly vigilant about money laundering and the financing of terrorism and closely monitors the Swiss financial markets for AML/CFT compliance.
In performing that aspect of its supervisory role, FINMA conducts audits and reviews of financial institutions to verify that appropriate AML/CFT measures are in place. These measures include:
- Developing a risk-based AML/CFT strategy
- Reporting suspicious transactions
- Implementing robust screening measures for politically exposed persons, and for clients from high-risk countries
- Training staff in AML/CFT policy and performing internal inspections
FINMA may delegate some aspects of its supervisory role to third-party audit firms or appointed agents on a case-by-case basis.
Where it finds evidence, FINMA has the authority to investigate violations of its legislation (and other irregularities) and, if necessary, take enforcement actions to restore compliance. The enforcement tools available to FINMA include the confiscation of profits, professional restrictions, and organizational amendments to the companies involved in wrongdoing. In worst cases, FINMA may revoke licenses or even liquidate offending companies.
When necessary, FINMA issues regulations to achieve its supervisory objectives. It issues periodic guidance to help financial institutions understand how to comply with FINMA policy and may also enact its own ordinances to set out technical details with greater clarity. FINMA provides its expertise to the government in the preparation of draft laws and contributes to the parliamentary process of developing new regulations.
“The Swiss government and its regulator was one of the first to understand the potential of Blockchain technologies and digital assets. Blockchain enabled e-voting in the City of Zug, which along with numerous proof-of-concepts, led to an influx of foreign talent and the famous ‘Crypto Valley’, which quickly outgrew Zug.
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Urs Bolt, Expert Advisor in Digital Assets and RegTech