The Swiss Financial Market Supervisory Authority (FINMA) has established the guidelines for granting FinTech licenses starting with 2019. The new guidelines aim to significantly simplify the application process for interested parties.
The Swiss parliament has introduced the new FinTech license granted to persons under the Article 1b of the Banking Act to boost financial coFinTech licensing in Switzerland simplified based on new FINMA regulation
As of 2019, the Swiss Financial Market Supervisory Authority (FINMA) has enacted new guidelines for granting FinTech licenses to businesses. These reviewed guidelines are set to make the application for licensing simpler by reducing the bureaucracy applicants were subject to.
Under Article 1b of the Banking Act, Parliament has approved the issue of this new FinTech license under less stringent requirements. This move is aimed at improving conditions for financial companies seeking licensing in Switzerland. The Federal Council has publicised the terms of the new FinTech license in a Banking Ordinance.
The Swiss Financial Market Supervisory Authority (FINMA) is the body charged with the issue of FinTech licenses. Its role as the regulatory authority means it is also responsible for the supervision of businesses that have been granted FinTech licenses.
In a bid to make easier the application process simplified guidelines have been put in place for those pursuing FinTech licensing. Applicants also have the option of presenting their projects to FINMA prior to submitting their application.
All financial institutions holding FinTech licenses are required to have registered offices in Switzerland as well as operate within Swiss territory. Licensing makes provision for financial institutions to accept public deposits of up to CHF 100 million. This is subject to the deposits not being invested and being interest-free. Business operations for persons under the Article 1b of the Banking Act should not be conducted before obtaining a FinTech license from FINMA.
FinTech Licensing Requirements
The license application must contain the following information:
The reasons for the application;
A description of the organization and its activities, including the target market and geographical scope;
A certified extract obtained from the Swiss commercial register;
Details on the registered offices, its staff and available infrastructure;
Information about the group of companies, participation or other presences of the applicant where applicable.
Participations in the applicant to consider:
Share capital (nominal value, subscription etc.);
A list of all participants with a direct or indirect holding of at least 5% (beneficial owners with voting rights and capital interest);
A graphic illustrating all directly or indirectly qualifying participants up to the level of the beneficial owner, broken down by voting right and capital or by shares;
Information regarding any existing agreements or other ways in which the applicant may be materially influenced and their respective documentation;
Persons who hold a qualifying participation must provide a declaration as to whether they hold the participation on their behalf or on the behalf of third parties and if there is the case of granted option facilities or similar rights for the respective participations.
Information on the members of the business’s governing bodies is also required. The application should specify the structure of the governing body assigned administration of the business. The structure of the executive board should be included.
Relevent details on the members of the governing bodies include the following:
Copies of the identification documents;
Copies of the Swiss residence permits for foreign individuals;
Copies of diplomas and other references;
Swiss criminal record extracts;
Criminal record extracts from the previous country of residence for foreign individuals who have lived less than 5 years in Switzerland;
Debt enforcement register extracts;
Declarations regarding concluded and pending legal proceedings;
Declarations regarding other participations in supervised institutions;
Declarations regarding other directorships.
Supporting documentation for the application should reveal the internal organization and the business activity of the applicant through the following:
Detailed descriptions regarding the business processes and activities;
A business plan which must include the budget for the next financial three years, with realistic, optimistic and pessimistic scenarios;
The Articles of Association and other organizational regulations, tailored to the business activities of a person pursuant to Article 1b of the Banking Act;
An organizational chart;
Regulations and policies related to the internal control system, risk and compliance;
A detailed description of how public deposits are held;
Details of information for clients pursuant to Article 7a of the Banking Ordinance;
Descriptions of any conflict of interest and the related measures pursuant to Article 14g of the Banking Ordinance.
The application filed must contain proof that financial requirements in regards to minimum capital requirements are met. The business must prove its ability to continuously meet these requirements by providing information about financing or capital sources. Institutions providing financial services are required to provide a detailed organizational chart on existing or planned licenses granted under the financial market law.
Once a license is granted, the license holder will be subjected to regulatory audits by FINMA. Applicants are therefore required to explicitly agree to these and also to provide information concerning the services of approved audit firms.
Changes made to the licensing basis
In the event that there is change on the basis on which a FinTech license is granted, a report must be filed with the regulator. Material changes will also affect the business’s operations as FINMA will have to grant approval first before the business can continue with its activities
Changes that will require approval from FINMA include the following:
Changes related to important documents, such as the articles of association and the organizational rules;
Changes related to the holders of qualified participations;
Changes regarding the persons entrusted with the management and administration of the business;
Any changes related to the organization;
Changes related to the internal corporate governance regulations;
Changes related to the core and non-core business activities;
Changes related to the outsourced core activities.
Documentation which has undergone change has to be filed with FINMA for approval. Justification for any of these changes has to be included within the license application. FINMA representatives are available to help clarify how such changes will affect your status as a FinTech license holder where one needs help.
Download the FINMA FinTech License Guidelinesmpanies by relaxing the current requirements for obtaining such a license. Thus, the Federal Council has set out the terms of this license in a Banking Ordinance.