Swiss Banking License Requirements
The Swiss Financial Market Supervisory Authority (FINMA) is the regulatory body responsible for supervising the financial markets in Switzerland. FINMA has published licensing process guidelines for Swiss banks and securities dealers which outline the requirements that must be met in order to obtain a license. The Swiss banking license requirements and process are complex and rigorous.
Banks seeking to obtain a license must meet a number of specific requirements set forth by FINMA. The licensing process is designed to ensure that banks operate in a sound and prudent manner. Additionally, they must have the necessary systems and controls in place to manage risks effectively.
Swiss Bank License Requirements
In order to obtain a banking license in Switzerland, the applicant must meet the following requirements:
- Legal form and purpose. The bank must have its registered office in Switzerland. The purpose of the bank must be limited to the following banking activities: accepting deposits, granting loans, and providing payment services.
- Capital requirements. The bank must have a minimum fully paid up capital of CHF 10 million. The bank must also have adequate capital to support its business activities and manage risks.
- Organisational structure. The bank must have a clear and transparent organisational structure. Specifically, it must have a board of directors responsible for the overall management of the bank. The bank must also have a clearly defined and independent risk management function.
- Business plan. The bank must submit a detailed business plan to FINMA. It must include information on the bank’s business model, products and services, target market, risk management, and financial projections.
- Fit and proper test. The bank’s board of directors, executive management, and significant shareholders must pass the fit and proper test. Specifically, this means they must have the necessary skills, experience, and integrity to manage a bank.
- Anti-money laundering (AML) and counter-terrorist financing (CTF) measures. The bank must have effective AML and CTF measures in place, which includes a risk-based approach to identifying and verifying the identity of customers and conducting ongoing monitoring of their transactions.
- IT and cybersecurity. The bank must have robust IT and cybersecurity systems and controls in place to ensure the confidentiality, integrity, and availability of data and information.
- Client assets protection. The bank must have adequate systems and controls in place to protect client assets. These must include segregation of client assets from the bank’s own assets and regular reconciliation of client accounts.
- International standards. The bank must comply with relevant international standards, such as the Basel Committee on Banking Supervision’s Basel III framework and the Financial Action Task Force’s (FATF) AML/CFT recommendations.
In addition to meeting these requirements, the bank must also submit a comprehensive application to FINMA. Furthermore, it must include a detailed description of the bank’s business activities, governance, risk management, and compliance systems and controls. FINMA will then conduct a thorough review of the application, which includes an on-site inspection of the bank’s premises and systems.
Once the Swiss bank licensing process is complete and the bank has obtained its license, it must continue to meet ongoing regulatory requirements, including regular reporting and compliance with prudential standards and AML/CFT regulations. FINMA states that the application should take six months, once submitted.
In summary, obtaining a banking license in Switzerland is a rigorous and complex process that requires the bank to meet a number of specific requirements and comply with international standards. The licensing process is designed to ensure that banks operate in a sound and prudent manner. Just as importantly, that they have the necessary systems and controls in place to manage risks effectively.
Marvin Rowe, LL.M.