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Newsflash Banking & Finance: FinTech Licence

06.12.2018 – From 1 January 2019, companies that do not carry out traditional banking activities will be able to receive an authorization from FINMA in order to accept deposits from the public up to a maximum of CHF 100 million in relation with their activities. This new licensing category is mainly intended for FinTech companies, in particular (but not only) those that have a business model related to the management and/or conservation of crypto-currencies.

The new "FinTech Licence" will be available to any company that fulfills the required conditions, even if its business model is not based on new financial technologies, provided that (i) it is principally active in the financial sector and (ii) does not operate characteristic activities of banks (in particular interest operations). Traditional financial institutions, such as banks, will not be prevented from creating a company or acquiring a stake in a company, which will hold a FinTech Licence, if they wish so. A traditional financial institution may in particular consider this possibility if it intends to create a joint venture with a technology company in order to offer new technology-based services to its clients with a separate structure.

The FinTech Licence is based on the new Art. 1b of the Banking Act (BA), and on the Banking Ordinance (BO) as amended, which will both come into force on 1 January 2019.

While Art. 1b of the BA provides for an application by analogy of the provisions of the BA to FinTech Licence holders, subject to certain adjustments, the amendments of the BO that will enter into force on 1 January 2019 clarify whether the provisions of the BO apply (i) only to banks, (ii) only to FinTech Licence holders, or (iii) to both banks and FinTech Licence holders. This constitutes a clear improvement over the version that the Federal Council put out for consultation in June 2018. Indeed, the initial version was replicating - at the expense of the principle of legal certainty - the mechanism set forth in Art. 1b of the BA of an application by analogy of the rules applicable to banks.

FinTech Licence holders will not be subject to the capital and liquidity requirements applicable to banks, but will nevertheless have to hold a minimum capital equivalent to 3% of the deposits, of at least CHF 300'000. They will have to meet various requirements in terms of organization, risk management and compliance, but then again these requirements are more flexible than those applicable to banks, and may even be subject to exemptions from FINMA in certain specific cases. They will also be subject to less stringent accounting requirements.

FinTech Licence holders will nonetheless be subject to the same transversal laws as banks, including without limitation the Anti-Money Laundering Act, the Data Protection Act and in the near future, the Financial Services Act (FinSA). They will also be required to appoint a prudential audit firm and will be subject to certain specific requirements, among which (i) the prohibition to invest or remunerate the deposits and (ii) the obligation to specifically inform their customers on the risks resulting from their business model, services, and the technology that they are using, as well as on the fact that the deposits are not covered by the deposit guarantee.

On 3 December 2018, FINMA published guidelines for parties interested to apply for the FinTech Licence. If you wish to discuss the possibility of applying for a FinTech Licence and/or its relevance for your business, we are available to assist you on this topic.