Swiss Financial Market Supervisory Authority (FINMA)

FINMA is in charge of ensuring that financial institutions in Switzerland function in accordance with the law as part of its control over financial markets. The Anti-Money Laundering Control Authority, the Swiss Federal Banking Commission, and the Federal Office of Private Insurance merged to become the Swiss Financial Market Supervisory Authority (FINMA) on June 22, 2007. FINMA is an independent regulatory agency in Switzerland that oversees financial institutions such as banks, insurance firms, stock exchanges, and investment funds. Its mission is to safeguard the functioning of Switzerland's financial markets as well as the interests of creditors and investors. Its mission is to identify and combat illicit activity such as money laundering and terrorism financing.

 

FINMA is an autonomous authority that reports directly to the Swiss Federal Department of Finance and is based in Bern, Switzerland's capital. FINMA is administered by a board of directors selected by parliament, which CEO Mark Branson presently manages. To properly carry out its regulatory role, the board controls FINMA's budget, establishes its strategic direction, and maintains communication with Switzerland's important financial authorities.


Anti Money Laundering Guide in Switzerland



What Does FINMA Do?

FINMA focuses on four primary duties to safeguard participants in Swiss financial markets from money laundering and other illegal activity and guarantee the financial industry continues to function properly. These duties include:

 

Licensing: FINMA is in charge of authorizing and licensing all companies wishing to operate in the Swiss financial industry. Financial institutions can get various licenses based on the sort of financial activity they participate in, ranging from a basic FINMA registration to more rigorous continuous prudential monitoring.

 

Supervision: FINMA supervises financial institutions using a risk-based strategy, seeking to detect dangers that might impact individual organizations or the entire financial system. Money laundering and the funding of terrorism are two issues that FINMA is particularly concerned about, and it closely monitors the Swiss financial markets for AML/CFT compliance.

 

FINMA conducts audits and assessments of financial institutions to ensure that proper AML/CFT safeguards are in place as part of its supervisory responsibility. These steps include:

  • developing a risk-based anti-money laundering/counter-terrorist financing plan
  • reporting suspicious activity
  • Putting in place stringent screening procedures for politically exposed individuals and clients from high-risk nations; 
  • educating personnel on AML/CFT policies and conducting internal audits

 

FINMA may delegate some components of its supervisory duty to third-party audit firms or appointed agents on a case-by-case basis.

 

Enforcement: FINMA has the power to examine potential infractions of its regulations (as well as other inconsistencies) and, if required, take enforcement action to bring the situation back into conformity. Profit confiscation, professional limitations, and organizational adjustments to the enterprises implicated in misconduct are among the enforcement instruments available to FINMA. In the worst-case scenario, FINMA may withdraw licenses or even dissolve offending businesses.

 

Regulation: FINMA publishes regulations as necessary to meet its supervisory goals. It publishes periodic recommendations to assist financial institutions in understanding how to comply with FINMA policy, and it has the authority to establish its own laws to clarify technical matters. FINMA helps the parliamentary process of drafting new rules by providing its expertise to the government to formulate draft legislation.


How Does FINMA Supervise the Digital Economy?

FINMA has been active in its oversight of Switzerland's digital economy since the early 2010s. Recognizing the potential influence of fintech on financial services, FINMA enacted plenty of new rules, including laws to incorporate cryptocurrencies into the economy and a fintech license to help startups transition to the same regulatory framework as established financial institutions. FINMA's digital innovation strategy is still evolving.


FINMA and its National Stakeholders

FINMA collaborates with a wide range of national agencies and organizations. The degree permissible by legally mandated official secrecy requirements maintains a policy of open and transparent interaction with monitored institutions, other stakeholders, and the general public.


FINMA has continuous interaction with about a hundred institutions and groups in various formats. Supervisory and criminal prosecution authorities, as well as other authorities and federal agencies, as well as organizations of monitored institutions, fall under this category.


Some of the stakeholders of FINMA are as follows:

  • Parliament
  • Entire Federal Council
  • FDF/SIF
  • SNB
  • TOB
  • Attorney General’s Office
  • Consumer protection organizations
  • Trade associations
  • Overseers’ associations

FINMA also emphasizes communication with trade, professional, and staff groups, consumer protection organizations, and relevant authorities in several supervisory areas. FINMA strives to promote knowledge of supervisory and regulatory topics and promote awareness of financial market concerns by engaging in active interaction with its stakeholders.


Beyond Switzerland

One of FINMA's larger goals is to improve Switzerland's financial system's prestige and position as a worldwide financial center. In the battle against international money laundering and terrorist funding, FINMA represents Switzerland on a global scale and routinely collaborates with foreign financial organizations.



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