SWITZERLAND Law and Practice Contributed by: Lukas Morscher and Lukas Staub, Lenz & Staehelin
enforcement powers, SROs are responsible for supervising compliance with the due diligence obligations of the financial intermediaries. FINMA, in turn, actively supervises the SROs. • Banks, insurers, managers of collective assets, fund managers and securities firms are required by financial market regulation to mandate an inde - pendent audit firm supervised by the Federal Audit Oversight Authority (FAOA) as statutory auditor. • Under FinIA, asset managers and trustees are required to associate themselves with an inde - pendent, privately organised supervisory organisa - tion (SO), while FINMA retains the competence to authorise asset managers and trustees as well as to conduct any relevant enforcement proceedings. The ongoing supervision of asset managers and trustees is delegated to the SO, which in turn must obtain authorisation from FINMA – which is itself supervised by FINMA. Furthermore, there are many private for-profit and not- for-profit organisations active in the fintech industry that are helping to define industry standards. Most notably, the Swiss Bankers Association has defined several standards applied by banks – eg, on opening corporate accounts for DLT companies. 2.13 Conjunction of Unregulated and Regulated Products and Services Although no specific rules on the conjunction of unregulated and regulated products and services apply, financial service providers are required to take appropriate measures to avoid conflicts of interest. As a general principle, most regulated entities (eg, asset managers, managers of collective assets, insurers) are also required by law to only pursue activities related to their regulatory status. FINMA may, however, grant exemptions subject to applicable laws. 2.14 Impact of AML and Sanctions Rules Many fintech companies are likely to qualify as finan - cial intermediaries and may, therefore, be subject to AMLA. Fintech companies subject to AMLA are not only required to join an SRO (unless otherwise supervised by FINMA – eg, as a bank), but AML obligations also include due diligence obligations (including KYC rules
and record-keeping obligations), reporting obligations in the event of a suspicion of money laundering or obligations to freeze assets under certain conditions. AMLA is relatively easy to comply with and should not represent a significant barrier to entry. However, deal - ing with the associated costs requires careful planning, and business models may need to be adapted. This applies particularly to fintech companies providing alternative finance (eg, crowd investment) platforms, payment services or the professional purchasing and selling of virtual currencies. As regards sanction rules, the Federal Council adopt - ed the sanctions packages imposed by the EU in view of the war between the Russian Federation and Ukraine for Switzerland on 28 February 2022. The Federal Council has since consistently updated the Swiss sanctions regime to take account of additional EU sanctions packages that have been enacted in the meantime (subject to very limited exemptions). The Swiss Federal Ordinance is instituting measures in connection with the situation in Ukraine including, among others, financial sanctions against certain list - ed individuals and businesses and bans on providing certain financial services to Russian nationals as well as individuals and businesses residing in the Rus - sian Federation. Compliance with sanctions may be operationally challenging and requires utmost care, as breaches of sanctions regulations may result in legal and reputational risks for fintech companies. The Swiss State Secretariat for Economic Affairs (SECO) maintains a public website with information and guid - ance on export control and sanctions. 2.15 Financial Action Task Force (FATF) Standards Switzerland has been a member of the Financial Action Task Force (FATF) since 1990 and, according to the Swiss federal government’s published financial market policy, is actively involved in the work of the FATF for effective and appropriate solutions and the uniform implementation of standards worldwide. In the FATF’s most recent full assessment of Switzer - land’s AML/combating the financing of terrorism (CFT) regime, the FATF found that it “is technically robust and has achieved good results”, but that it “would still benefit from some improvements”. In its most recent
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