FINMA Toughened the Transaction Amount Limit for Unidentified Traders

The Swiss Financial Market Supervisory Authority (FINMA) has introduced new changes to the Financial Services Act and Financial Institutions Act. From now on, regulated exchanges and exchangers are obliged to identify a user who is going to perform a cryptocurrency transaction worth more than 1000 Swiss francs. Both orders came into legal force on 1 January 2021, amendments were made on 7 February, and FINMA is ready to keep discussing the documents until 9 April.

Changes supposed to affect Swiss exchange customers

Before the amendments, clients of exchanges, brokerage firms, and exchange services registered in Switzerland had not been obliged to pass any identification when performing transactions under 5000 CHF ($5256 or €4716). Such a threshold was introduced in 2017 and had been used for every transaction. In February 2021, it was lowered to 1000 CHF ($1051 or €943). The limit applies to selling or buying crypto for fiat money and to exchanging cryptocurrencies.

Please keep this new rule in mind if you use one of these Swiss platforms:

• Lykke crypto exchange;
• ShapeShift crypto exchange;
• Smart Valor crypto exchange;
• Swiss Crypto Exchange (SCX);
• Bitcoin Suisse AG brokerage firm;
• Bity SA brokerage firm;
• Crypto Finance AG brokerage firm;
• SIX Digital Exchange (SDX), a digital asset platform;
• SIX Swiss Exchange, a stock exchange.

Besides, users of centralized European exchanges have long been forced to undergo KYC verification when first depositing or withdrawing fiat funds. European financial regulators imposed that rule in 2016-2017.

Why FINMA nips into cryptocurrency exchange

Switzerland is a member of the Financial Action Task Force on Money Laundering, jointly with other 36 countries. FINMA participated in designing of 40 recommendations and 9 special recommendations of FATF and adheres to the standards developed by the group.

Swiss law has an act and ordinance on the anti-money laundering activities, AMLA and AMLO. Besides, the financial regulator has supplementary acts in the arsenal, FinSA and FinIA (mentioned above), and an in-house ordinance FINMA-AMLO. The agency regularly updates the documents following the changes made to FATF recommendations.

FATF issued the latest version of recommendations on 21 June 2019 and gave the institutions one year to ensure compliance therewith. One of those recommendations advises financial regulators to oblige crypto service providers to collect customer information upon any transaction worth more than 1000 conditional units performed by their clients. Cryptocurrency exchanges, brokers, exchange services, and hedge funds will be able to intercommunicate personal data and verified transaction details and provide them to a financial regulator upon request.

Even though FATF recommendations are not formal or legally valid thus not obliging, they are considered an international standard that not only full FATF members but also other developed countries try to stick to. Switzerland displays an extreme eagerness on preserving reputation after that it had decided to become a fintech centre and expressed acceptance of crypto and blockchain technologies. In this context, it is FINMA that is called to monitor fairness in financial markets and prevent illegal activities or money laundering — particularly through cryptocurrencies.