Swiss regulators secretly impose stricter rules against money laundering on crypto brokers and platforms. The reason for taking this step is international pressure and damage to reputation.
FINMA’s main message to the crypto industry is to take immediate action to prevent criminals’ use of digital assets.
The mission aims to reduce the risks in their business models, both in money laundering and terrorist financing. According to the Bern-based regulator, swift action is necessary to mitigate risks and losses.
FINMA intends to lower the threshold for which intermediaries need to identify clients in Bitcoin and other transactions. The Swiss regulator is currently using a new rule for business, according to the statement, at $1,082 per month.
This is a stricter approach than Finma has with fiat deals. The financial intermediaries have to place their clients in foreign exchange trading above 5,000 francs and 15,000 francs in all monetary transactions.
The move came as a big surprise to the Swiss crypto industry. The FATF, two years later, recently updated its guidelines on digital assets.
Finma reduced the cryptocurrency bar to 1,000 francs earlier this year after consulting with the industry. The latest method, used as a monthly measurement, is performed without external consultation.
Furthermore, providers consider tightening regulations to address dramatic breaches of business models. As a rule, money laundering rules do not apply to individual transactions, only those that seem to be related.
This even allows for interpretation in use. The relevant Swiss law on virtual assets does not specify whether the threshold applies to 1000 francs per month or one client per day.
The difference is this: a more generous interpretation means that a client can buy and sell 30,000 francs a month without identification – and in a tighter sense, 1,000 francs a month. FINMA takes this strict view of self-regulating crypto firms.
The FINMA order aims to shut down Bitcoin ATMs, which drug dealers often use as payment systems. The new regulation does not change the money laundering law. However, the corporation is trying to avoid any regulatory arbitrage that would cause various self-regulatory organizations.
FINMA is responsible for financial regulation in Switzerland. It oversees banks, securities dealers, stock exchanges, and insurance companies. The company is based in Bern and is independent of the central federal administration.
FINMA was founded in 2007, following the acquisition of FINMASA in the Swiss financial market. FOPI and EBK merged into one agency, and as a result, the organization undertook all financial regulations in Switzerland.