On 26 August 2019, the Swiss Financial Market Supervisory Authority FINMA published the FINMA Guidance 02/2019 regarding payments on the blockchain (the "Guidance").1 This Guidance informs market participants on FINMA's interpretation of Swiss anti-money laundering ("AML") regulation in the context of blockchain payment services, in particular with regard to the requirements for financial service providers under FINMA supervision to transfer payment originator and beneficiary information to the recipient institutions. The practice adopted by FINMA is rather restrictive and goes beyond the standards established by the Financial Action Task Force FATF in this regard. For the time being, this practice will substantially limit affected Swiss market participants in offering payment transactions in digital tokens. While the Guidance applies to service providers subject to FINMA supervision only, such as banks, it can be expected that recognised Swiss AML self-regulatory organisations ("SRO") will be required to follow suit with respect to their interpretation of analogous provisions in their regulations.
Introduction and Background
In the Guidance, FINMA starts by reaffirming its technology neutral approach to regulation, which has generally been considered well-suited to enable and support innovation in the financial marketplace. However, FINMA also points out that operators of blockchain-based business models cannot be allowed to circumvent the existing regulatory framework, in particular AML regulation, and that FINMA has therefore consistently applied the Swiss Anti-Money Laundering Act ("AMLA") to blockchain service providers. The stated purpose of the Guidance (which, in the typology of FINMA communications, sits above a plain press release, yet below the more formal and structured FINMA circular) is to clarify FINMA's position with respect to the application of the requirements of article 10 of the FINMA-Anti Money Laundering Ordinance ("AMLO-FINMA") to payment transactions on blockchain. Pursuant to article 10 AMLO-FINMA, the financial intermediary of a payment originator is required to provide and transmit information on the originator and the beneficiary to the financial intermediary on the receiving end of the payment transaction.
1 . See the media release of 26 August 2019, available under: https://www.finma.ch/en/news/2019/08/20190826-mm-kryptogwg/.
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