On 1 February 2017, the Federal Council launched a public consultation on proposed amendments to the Banking Act (BA) and the Banking Ordinance (BO), which seek to ease the Swiss regulatory framework for providers of innovative financial technologies (FinTech), e.g. crowdfunding and crowd-lending, electronic payment services, robo-advice and crypto-currencies. This legislative project aims to implement the proposals of the Federal Council announced on 2 November 2016 (see Bär & Karrer Briefing November 2016), which should strengthen the competitiveness of the Swiss financial centre. The consultation will last until 8 May 2017.
The proposed amendments to the Banking Act (Draft BA) and the Banking Ordinance (Draft BO; together the Draft Rules) build on the three pillar approach to support FinTech that was presented by the Federal Council in November 2016 by creating two exemptions from the requirement to obtain a banking licence in connection with certain deposit-taking activities and introducing a new type of licence, which would be subject to less stringent requirements, for financial innovators and other interested parties (banking licence 'light'). As expected, the exemptions and reliefs do not extend to anti-money laundering regulations, which will continue to apply to FinTech firms if they act as financial intermediaries.
If adopted, the proposed exemptions and the new licensing regime are expected to lower market entry barriers for FinTech firms, reducing their operational costs and increasing competition in the field. Overall, the new Draft Rules are likely to enter into force at the earliest in 2018, assuming the proposal is received positively by all stakeholders.
PROPOSED NEW RULES
Extension of the Maximum Holding Period of Monies on Settlement Accounts
Under current Swiss banking regulations, third-party monies accepted on interest-free accounts for the purpose of settlement of client transactions do not qualify as deposits from the public (article 5 para. 3 lit. c BO). This exemption allows a financial intermediary to hold client monies for settlement purposes without needing a banking licence.
Currently, the Swiss Financial Market Supervisory Authority (FINMA) considers that monies may be held on a settlement account for seven days at most without qualifying as deposits from the public as defined under banking regulations. The Draft Banking Ordinance proposes to codify this practice and, at the same time, extend the maximum...