Compliance Risks in Fintech in Switzerland: Know the Rules Where You Wish to Operate

Introduction

Zurich, May 20th 2019 - As fintech entrepreneurs and developers expand their products globally, jurisdictional rules and regulations can be a daunting task. Failure to comply with regulatory requirements can have serious consequences.

The Importance of Understanding Regulatory Requirements

Swiss fintech companies must understand that what is permitted in Switzerland may not be allowed in other European countries or even worldwide. Different jurisdictions use different laws - civil, common, or Sharia law - which can result in varying outcomes for the same product. This highlights the importance of understanding the regulatory landscape before launching a product.

Avoiding Compliance Risks

Many start-ups mistakenly believe they can figure out legal requirements on their own or that laws will adjust to their product. However, this approach can be detrimental in the long run. Without proper legal expertise, fintech companies may find themselves at a disadvantage against well-funded and established financial institutions that have the resources to comply with regulatory requirements.

The Role of Legal Counsel

FinTech is a rapidly evolving industry, and the rules and regulations surrounding it are constantly changing. Therefore, it’s essential for fintech companies to view legal counsel as an asset rather than an added cost. By engaging competent legal counsel, companies can ensure they meet compliance standards in multiple jurisdictions.

Researching Regulatory Requirements

Swiss fintech entrepreneurs should not assume that products compliant with Swiss regulations will be automatically compliant elsewhere. With over 195 countries and nearly 8 billion consumers, it’s crucial to research the regulatory requirements of each jurisdiction.

Switzerland’s Progressive Regulations

Fortunately, Switzerland has progressive regulators working closely with the fintech community to create a legal framework for fintech success. However, not all jurisdictions have made similar progress, making it essential to understand local regulations before deploying a product.

Getting Started

To get started, fintech companies can review the ICLG.com website, which provides an overview of 59 countries’ fintech laws and regulations. By taking the time to research licenses and regulations, companies can avoid compliance risks and achieve their goal of disrupting the financial services industry.

Conclusion

By recognizing that multiple jurisdictions and laws apply to a product, engaging in legal research, and seeking competent legal counsel, fintech companies can ensure success in the rapidly evolving fintech landscape.

About the Author

Micah D. Wells J.D., LLM is an American licensed Attorney based in Dubai, UAE, with over 25 years of experience in the private and public sectors across the US, Europe, Africa, and the Middle East. He has authored several articles on fintech and international trade law and conducts lectures on ethics and international practice of law.