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    FINMA Guidance for Applying AML Rules to Blockchain Service Providers

    August 26, 2019

    The Swiss Financial Market Supervisory Authority FINMA published guidance on the application of Swiss anti-money laundering, or AML, rules to the financial services providers it supervises in the area of blockchain technology. FINMA also issued, for the first time, banking and securities dealer licenses to two pure-play blockchain service providers: SEBA Crypto AG registered in Zug and Sygnum AG registered in Zurich. The practice set out in this guidance applies in full to the supervision of these two new institutions.

    FINMA emphasizes that blockchain-based business models cannot be allowed to circumvent the existing regulatory framework. This applies particularly to the rules for combating money laundering and terrorist financing, where the inherent anonymity of blockchain technology presents increased risks. The published guidance on virtual asset service providers deals with blockchain service providers such as exchanges, wallet providers, and trading platforms. It requires that the existing rules on combating money laundering also apply to such service providers. In its guidance, FINMA provides information about this technology-neutral application of the regulation to payment transactions on the blockchain.

    Institutions supervised by FINMA are only permitted to send crypto-currencies or other tokens to external wallets belonging to their own customers whose identity has already been verified and are only allowed to receive crypto-currencies or tokens from such customers. FINMA-supervised institutions are thus not permitted to receive tokens from customers of other institutions or to send tokens to such customers. This practice applies as long as information about the sender and recipient cannot be transmitted reliably in the respective payment system. Unlike the FATF standard, this established practice applies in Switzerland without the exception for unregulated wallets and is, therefore, one of the most stringent in the world.

     

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    Keywords: Europe, Switzerland, Banking, Securities, Crypto-Assets, AML, Blockchain, Fintech, PMI, Bank Licenses, FINMA

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