Financial Crime World

FINMA Cracks Down on Non-Swiss Financial Service Providers

In an effort to strengthen regulations in the Swiss financial market, the Swiss Financial Market Supervisory Authority (FINMA) has introduced new requirements for non-Swiss financial service providers operating in Switzerland or providing services to Swiss-based clients.

Mandatory Registration with Client Advisor Register

According to Article 33 of FINMAG, non-Swiss financial service providers that offer financial services to Swiss-based clients must be registered with the client advisor register. This requirement also applies to non-Swiss client advisors who are part of a group supervised by FINMA and do not provide financial services exclusively to professional clients and institutional clients.

Client Advisor Register Requirements

The client advisor register is a mandatory requirement for access to the Swiss market, and each affected client advisor must be registered no later than June 30, 2020. The register will conduct a thorough examination of each application and only accept client advisors who meet the following criteria:

  • Sufficient knowledge of behavioral rules under FinSA
  • Required knowledge related to executed financial services
  • Professional liability insurance or equivalent security
  • Affiliation to an Ombudsman
  • No entry in the penal register regarding wealth under the Swiss Penal Law Act
  • No ban on being professionally active issued by FINMA

Register Information

The client advisor register will contain a minimum of the following information about each client advisor:

  • Name and surname
  • Name or firm and address of the financial service provider for which they are active
  • Function and position within the organization
  • Activities, education, and continuing professional education
  • Name of the Ombudsman to whom the financial service providers are affiliated with
  • Date of entry

Affiliation to an Ombudsman

Non-Swiss financial service providers must also affiliate themselves with an Ombudsman, which will provide an additional means of alternative dispute resolution for clients. The proceedings before the ombudsman must be:

  • Straightforward
  • Fair
  • Quick
  • Impartial
  • Inexpensive or free of charge for the client

Financial Service Provider Obligations

Financial service providers have extensive obligations related to the Ombudsman, including:

  • An obligation to affiliate with an Ombudsman no later than at the time when they become active in Switzerland or related to Swiss-based clients
  • An obligation to inform their clients about the possibility of mediation proceedings through an Ombudsman upon entering into a business relationship and at any time upon request

Impact on Market Participants

The introduction of these new regulations is expected to have a significant impact on market participants in Switzerland, with several new public services set to be established, including:

  • Prospectus inspection offices
  • Client advisor registers
  • Ombudsman offices