On 26 August 2019, the Swiss Financial Market Supervisory Authority FINMA ("FINMA") published its Guidance 02/2019. Therein, FINMA provides new insight into how Swiss anti-money laundering rules apply in a blockchain environment.
FINMA Guidance 02/2019 Payments on the blockchain
In June 2019, the Financial Action Task Force (FATF) issued its guidance on virtual assets and virtual asset service providers concluding that the effective implementation of anti-money laundering measures requires that information about the client as well as the beneficiary is transmitted when a token is being transferred. In the implementation of this recommendation, FINMA on 26 August 2019 published its guidance 02/2019 ("Guidance 02/2019") providing some helpful insight into how the Swiss anti-money laundering regime applies to transactions in a blockchain environment.
Having recognized the innovative potential namely of the blockchain technology, FINMA confirmed its technology-neutral approach to the regulation and supervision of these new technologies. This approach means, that in order to prevent the circumvention of existing financial market regulation, FINMA applies the same rules to financial services irrespective of whether they are offered via traditional means or via a blockchain solution. In particular, this holds true for the Swiss law requirements which aim to prevent and combat money laundering.
Under Swiss anti-money laundering regulation, financial intermediaries have a wide range of duties, including, among others, joining a self-regulatory organization, the duties to monitor their business relationships, perform "know your customer" checks and, if there are reasonable grounds to suspect money laundering, file a report with the Money Laundering Reporting Office Switzerland. Furthermore, the failure to perform these duties may result in criminal sanctions.
While, in general, it is clear that these rules apply to blockchain service providers their specific repercussions may vary depending on what activity the blockchain service provider in question pursues:
Initial coin offerings
A blockchain service provider may issue tokens in the course of a so called initial coin offering ("ICO").
The Guidance 02/2019 does not address how this activity will be treated from an anti-money laundering point of view. Since the Guidance 02/2019 does not deal with the issuance of tokens and since the token purchase is a bilateral relationship between the issuer...