Fintech Market Overview

This article does not constitute legal advice.

Banking in Switzerland

Fintech Software

According to the Swiss Banking Act, anyone who accepts 'deposits from the public on a commercial basis' is subject to banking licence requirements. This is the case if either:

  • deposits of more than 20 investors are actually held; or
  • the person or entity publicly announces to a non-limited number of persons that it is willing to accept these funds (regardless of the final actual number of investors). 1

Thus, fintech companies that accept or raise funds stemming from the public, such as crowdfunding or ICOs, may fall under bank licence requirements. Bond issues do not qualify as deposits, neither do capital contributions that do not entail a repayment obligation, which is why ICOs are possible – under certain conditions – under Swiss law.1

To better accommodate Swiss fintech projects, in 2017 the Swiss government (the Federal Council) amended the Ordinance on Banks and Savings Banks (the Banking Ordinance) to include exemptions from the requirement to obtain a licence. As from 1 August 2017, the holding of client funds (of more than 20 investors and for a period longer than 60 days) no longer triggers banking licensing requirements (as it is no longer deemed to meet the requirement of being 'on a commercial basis') if certain requirements are met:

  • the funds do not at any time exceed 1 million Swiss francs;
  • the funds are neither reinvested nor interest-bearing (with exceptions); and
  • the depositors have been informed in writing or otherwise in text form prior to making the deposits that their funds are not covered by the Swiss depositors protection regime and that the institution is not supervised by FINMA. 1

With regard to point (a), the threshold will be calculated on the basis of the aggregate deposits held at any given period.1

In addition, funds on settlement accounts may be held for 60 days (previously only seven days) if they are not interest-bearing. This provision in particular aims to allow crowdfunding companies to hold assets for a longer period without requiring a banking licence.1

Furthermore, on 1 January 2019, a special licence was introduced: undertakings accepting deposits from the public of up to 100 million Swiss francs (including, in the future, crypto-based assets), but not paying interest on these deposits, may qualify for a 'banking licence light', a licence that subjects these undertaking to less stringent rules than the rules applicable to banks.8 This new licence is often referred to as a 'fintech-licence', although it is not only available to fintechs.1

Even if neither a banking nor a securities house licence is required, AML regulations and provisions may apply. Swiss AML regulations apply to institutions that are considered per se as financial intermediaries (e.g., banks, securities houses, fund management companies and insurance companies) and institutions that engage in a 'financial intermediary activity' (e.g., asset managers and investment advisers with power of attorney). If a fintech company is engaged in financial intermediary activity, it is required to join a recognised Swiss AML SRO or submit to direct supervision by FINMA on AML matters, and needs to comply with the applicable AML duties (such as identification of customers and establishment of beneficial ownership). Under Article 4, Paragraph 1, Letter b of the revised AML Ordinance (effective since 1 August 2021), it may be sufficient to qualify as a financial intermediary if a person helps to transfer virtual currencies to third parties, if that person has an ongoing business relationship with the counterparty. Some of the AML duties entail sanctioning provisions under criminal law, and these provisions are equally applicable to fintech companies. In its Supervisory Notification 02/2019 of 26 August 2019, FINMA held that token transfers require identification of the recipient and its beneficial owner, without a minimum threshold applying. Switzerland has, therefore, one of the strictest AML regimes for token transfers.1

Lending in Switzerland

Fintech in Switzerland

Fintech in other countries

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Swiss Fintech Lawyers

Maxim Minaev

Maxim Minaev

We provide legal and organizational services for the creation, structuring and development of fintech companies

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  1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/switzerland
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