Swiss Regulator Moves Forward with Crypto Money-Laundering Checks Despite Public Pushback
The Swiss Financial Market Supervisory Authority (Finma) has announced plans to increase money-laundering checks for cryptocurrency transactions, despite significant opposition from the country’s users. The new rules require customers to prove their identity if they make transactions totaling 1,000 Swiss francs or more over a month when converting crypto to cash or another anonymous form of money.
Rationale Behind the Move
According to Finma, virtual currencies are often used for illicit activities such as drug trafficking, darknet transactions, and cyberattack ransoms. The regulator notes that the anonymity and speed of cryptocurrency transactions increase the risk of money laundering. Finma aims to prevent “smurfing” - breaking up a large payment into smaller ones to avoid money-laundering checks.
Concerns and Criticisms
Finma initially proposed tightening up the 1,000-franc limit, which is currently measured daily. However, the regulator received numerous responses from citizens and crypto companies expressing concerns that the new rules were not neutral between different technologies and would create vulnerabilities for customer data.
- Critics argue that the new rules are biased towards certain technologies and may hinder innovation in the cryptocurrency sector.
- Others worry about the potential risks to customer data and privacy.
New Rules and Exemptions
Despite these criticisms, Finma has stood by its plans and announced that the new rules will only apply to anonymous transactions, such as those made on cryptocurrency ATMs. Switzerland has been seeking to establish itself as a hub for cryptocurrencies, but regulators are keen to shed the country’s reputation as a haven for money laundering due to its historically secretive banking sector.
Impact and Significance
The move is seen as a significant step in Finma’s efforts to regulate the cryptocurrency industry and prevent illicit activities. The regulator has emphasized that customer protection is a top priority and that the new rules aim to ensure that the financial system remains secure and trustworthy.
In conclusion, while the new rules have generated controversy, Finma believes they are necessary to prevent money laundering and maintain the integrity of the Swiss financial system. The move demonstrates the regulator’s commitment to ensuring the stability and security of the cryptocurrency industry in Switzerland.