Fintech Market Overview

This article does not constitute legal advice.

Cross-border payments in Switzerland

Fintech Software

As Switzerland is not a member of the European Union, regulated or licensed activities may not be passported into Switzerland. Holding a licence abroad may sometimes make a licensing process in Switzerland more cumbersome, as FINMA may reach out to the foreign authority to find an agreement on consolidated supervision, which may prove to be a lengthier process.1

Companies that provide services to clients in Switzerland on a pure cross-border basis (cross-border inbound) without physical presence may require a licence in certain instances. The distribution of collective investment schemes is permitted only if done by reverse solicitation, namely, on the initiative of the investor itself. The same applies with respect to insurance products. Both collective investment schemes and insurance products are subject to strict rules on marketing. Under the FinSA, client advisers of foreign financial intermediaries may only become active in Switzerland if they are registered in the Swiss client advisers register.1

A service provider is deemed to have physical presence in Switzerland if it has a branch or similar formal presence in Swiss territory or the presence of individual persons in Swiss territory on a permanent basis who are employed or mandated by licensee to act on its behalf. The term 'on a permanent basis' means having individuals permanently on the ground in Switzerland or individuals who frequently travel to Switzerland for the purpose of carrying out sales or marketing activities in Switzerland. FINMA has not published guidance on what constitutes frequent travel; whether travel is frequent is assessed by evaluating all relevant facts and circumstances (i.e., frequency of travel, number of persons travelling to Switzerland, etc.). FINMA has substantial discretion when assessing whether physical presence is established in Switzerland.1

There are currently no Swiss laws of general application prohibiting or subjecting to prior approval foreign investments in Switzerland (parliament is discussing introducing such rules in the future). Therefore, foreign investors do not generally need formal approval for their investments in Switzerland and no special governmental authority monitors them. Foreign investments in certain regulated industries might require governmental permission. If foreign nationals have a controlling influence on a bank, a securities trader or certain other prudentially supervised entities active in the financial sector (a finance company), the granting of a respective licence by FINMA is subject to certain additional requirements. Investment restrictions also apply to the acquisition of residential (but not commercial) real estate in Switzerland by foreign or foreign-controlled persons and under the Telecommunications Act for radio communication licences, under the Nuclear Act for nuclear power plants, under the Radio and Television Act for broadcasting licences and under the Aviation Act for the professional transport of passengers or goods.1

Switzerland does not have currency controls in place. Hence, both investments and repatriation of capital and profits are possible.1

Fintech in Switzerland

Fintech in other countries

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