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Swiss Watchdog FINMA Mandates AML Policies on Crypto

  • Richard Marley
  • September 27, 2021
  • 3 minutes read
  • 106
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The new legislation is trying to combat money-laundering following a series of major scandals in Switzerland

In an attempt to tackle money laundering, Swiss authorities are looking to limit the transaction amount threshold for crypto transactions to 1000 Swiss Francs per month, after which the identity of the end-user will be verified.

FINMA, the Swiss Financial Market Supervisory Authority, tasked with the protection of all bank users, policyholders and investors against fraudulent service providers, is set to impose this rule to strengthen the country’s Anti-Money Laundering (AML) controls on digital asset providers.

A letter from Christoph Kluser, who supervises the para banking system, stated that “FINMA would like to see further measures taken as part of a wider effort to combat money laundering and terrorism funding”.

Switzerland has been the target of numerous money-laundering scandals in recent months, including two corruption scandals – the Venezuelan PDVSA and 1MDB. The country is also looking to make serious amendments in its 24-year law to address some of the vulnerabilities that have allowed money laundering activities to thrive.

Digital assets such as cryptocurrencies seem to pose an additional risk of money laundering, with FINMA recently dismissing the banking licence of Bitcoin Suisse, a crypto broker, due to concerns over money laundering. In particular, FINMA considered the money laundering defence mechanisms of Bitcoin Suisse as having indications of weaknesses.

The regulation regarding 1000 Swiss Francs amount was passed after consultation with industry players. However, the monthly constraint has raised alarms as industry business models are likely to be affected.

Currently, 85,000 crypto service providers operate from Switzerland and numerous Swiss banks are accepting cryptocurrency payments, including SEBA bank and BBVA. The new FINMA regulation seeks to clamp down the use of crypto ATMs, which, according to FINMA, drug dealers are using as their primary payment system. The country has 130 Bitcoin ATMs, with Zurich and Lausanne leading the way with 38 and 20 respectively.

Suggested Read: Anti-Money Laundering Compliance for Crypto Exchanges [2021 Update]