FINMA Grants License to 2 New Crypto Banks, Brings Strict AML Laws

The AML rules can cripple the crypto industry in the country.

The Swiss financial regulator on Monday announced the issuance of banking and securities dealers’ licenses to two “pure-play blockchain service providers” – SEBA Crypto AG and Sygnum AG.

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Both of these companies will offer services only to institutional customers.

Unfavorable regulations on crypto firms

Beside granting new licenses, the Financial Market Supervisory Authority (FINMA) published guidelines for the application of regulatory frameworks on payments on the blockchain, which can be considered as too strict.

The watchdog agency clarified that the existing rules to check money laundering would apply to virtual asset service providers (VASPs) including exchanges, wallet providers, and trading platforms.

“Blockchain-based business models cannot be allowed to circumvent the existing regulatory framework,” the watchdog agency stated. “This applies particularly to the rules for combating money laundering and terrorist financing, where the inherent anonymity of the blockchain presents increased risks. For this reason, Switzerland has always applied the Anti-Money Laundering Act to blockchain service providers.”

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Mandatory customer verification

According to the guidelines, blockchain-based service providers are obligated to verify the identity of their customers, to establish the identity of the beneficial owner, and to take a risk-based approach to monitor business relationships. In addition, in case of suspected money laundering activity, these businesses need to file a report with the Money Laundering Reporting Office Switzerland (MROS).

Moreover, the guidelines also restrict digital asset transfers to or from wallet platforms only by FINMA-supervised institutions.

“Institutions supervised by FINMA are only permitted to send cryptocurrencies or other tokens to external wallets belonging to their own customers whose identity has already been verified and are only allowed to receive cryptocurrencies or tokens from such customers,” the agency stated.

“Unlike the FATF standard, this established practice applies in Switzerland without the exception for unregulated wallets and is, therefore, one of the most stringent in the world.”

Although Switzerland is known to be one of the friendliest regions to blockchain companies, the Swiss regulator is constantly battling with shady crypto projects. Earlier this year, it banned the $90 million initial coin offering (ICO) of crypto mining firm Envion AG for violating supervisory laws.

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