Due to the stability of its financial market, Switzerland is rightly called the number one financial center in the world. The ease of creating startup projects, registering SMEs, and setting up innovative foreign companies in Switzerland has gained it the reputation of the most attractive investment jurisdiction.
Considering registering a financial company in Switzerland? Looking to obtain a license authorizing management of fund assets in Switzerland? Our article will provide you with useful insights into the financial sector of Switzerland.
Legislative Framework
Entrepreneurs intending to set up a financial company in Switzerland are strongly advised to familiarize themselves with the legislative bodies in this jurisdiction. The first thing they need to know is that FINMA & SNB are the two main financial regulators in this country.
Those planning on obtaining a financial service provider license in Switzerland should keep in mind that according to the recent changes in the country’s legislation a new supervisory body called SO has been established.
Licensing
Those seeking to get a financial market operator license in Switzerland should submit their application with FINMA. Only those of them that satisfy its finance-, staff- and organization-related requirements will be eligible to get one.
It is also worth noting that FINMA grants a license authorizing execution of supervisory functions only to legal entities, and not their managers or stakeholders.
FinIA does not require CIS distributors to apply for authorization, nor does it require licensing of investment advisors.
Regulatory Framework
Individuals seeking to provide financial services in this jurisdiction must obtain a financial service provider license from FINMA. They are also required to put in place proper corporate rules and be organized in such a way as to be able to abide by their statutory obligations. Individuals responsible for managing financial institutions, as well as their qualified participants, are required to provide a guarantee of impeccable track record.
If you want to obtain permission to conduct banking activities in Switzerland, you should keep in mind that banks and securities dealers in this country are required to have sufficient capital. In addition, banks must meet the liquidity requirements set forth in respective legislation.
FinIA requires asset managers & their proxies to comply with its recently introduced licensing requirement. Non-domestic asset managers & their trustees that are physically present in this jurisdiction are required to obtain an asset manager license in Switzerland. Being physically present in the country requires registering a branch or an office of a foreign company in Switzerland.
Non-domestic intermediaries providing financial advisory services inside or outside of Switzerland are not required to apply for a financial service license in Switzerland.
Investigative Powers
FINMA will look into any information about activities that may be deemed as potentially illegal. The said information may provided to FINMA by other market participants, including 3rd parties & investors.
Scope of Authority
FINMA has at its disposal a number of administrative instruments but is not authorized to initiate civil or criminal proceedings.
Penalties
Those seeking to register a financial company in Switzerland should know that FINMA has a wide range of tools to ensure compliance with supervisory legislation. They include:
- Precautionary measures: FINMA can take precautionary steps when there is a risk to market participants or market as a whole.
- Ensuring compliance with the law: FINMA has the authority to impose penalties on violators of financial legislation.
- Declarative rulings or reprimands: FINMA can impose penalties on license holders and violators of financial legislation.
- Imposition of prohibitions/restrictions: FINMA can prevent violators of supervision legislation from executing their duties as senior officers for a 5-year period.
- Ordering stoppage or suspension of operation: FINMA can prohibit licenless operators from executing their activities.
Compliance
Opening a financial company in Switzerland requires compliance with a number of requirements. They include:
- Conducting risk assessment and devising a plan aimed at minimizing risks
- Reporting any significant changes in risk assessment
- Reporting results of risk assessment to the Board of Directors
- Informing the the Board of Directors about serious infringements
Need legal advice on potential risks in the Swiss financial sector? IQ Decision UK is always at your services.
Switzerland has some of the strictest AML regulations. It was one of the first countries to introduce against money laundering regulations.
How Financial Entities are Regulated in Switzerland
Normally, banking or other services can be provided without compliance with any licensing or registration requirements in Switzerland. However, if a non-domestic provider of financial services is physically located in Switzerland, they will be required to apply for a license.
If you are planning on establishing an investment fund in Switzerland, you should keep in mind that you will be required to comply with the requirements applicable to domestic investors.
Compliance with Internationally Accepted Standards
Despite not being an EU member, Switzerland attempts to introduce regulatory framework similar to that of the European Union.
Conclusion
The financial sector in Switzerland is one of the most tightly regulated in the world. Regulating the financial sector in Switzerland plays an important role in determining the attractiveness of providing financial services.
Need legal advice on registering a financial company in Switzerland in accordance with European standards? Need help with obtaining a financial operator license in Switzerland? IQ Decision UK can handle all that and more.
