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To set up a company to provide financial services and obtain an EMI license in Switzerland in the conventional sense is, in principle, possible, but with some reservations. The peculiarities of doing business in Switzerland stem from, in fact, the very idea of e-money. So we will focus on them in more detail in this article.
Exceptions for EMI business
The Swiss Banking Act clearly defines the range of persons who can conduct financial business in Switzerland and can accept money from individuals, ie deposits, and only banks are allowed to accept them. However, if funds in electronic form are meant, there are exceptions when the balance of such funds may not be considered a deposit. The following are examples of such cases:
- Funds are sent strictly for the purchase of goods or services, with:
- Cash withdrawal is not possible;
- Money transfer from person to person is not possible, as well as
- Transfer to own bank account;
- The amount of funds on the balance of one client does not exceed 3000 CHF. Customers are not interested in keeping large amounts on the balance sheet, and in the case of e-money this is usually the case because the funds are not insured and no interest is paid on them.
- In addition, funds must not be kept in the account in the same form for more than 60 days.
It turns out that if all three conditions are met, the funds received from the client will not be perceived as a deposit.
Obtaining a fintech license in Switzerland
Switzerland tries hard to position itself as a hospitable country for financial business. It has been reflected in the new form of license, which can be used by entrepreneurs looking for an EMI license in Switzerland. For the good part, it demonstrates the flexibility of Swiss legislation, and forms what is likely to be the basis for the further development of the financial services and technology market.
In essence, this license is almost identical to a full-fledged banking license, but obtaining a Swiss fintech license is easier and less time consuming. The simplifications covered regulatory issues such as auditing, corporate governance, capital and liquidity requirements, and investor protection.
The application for a license for fintech activities in Switzerland, or as it is also called light banking license, is submitted to FINMA (Swiss Financial Market Authority).
Fintech licenses can be obtained by asset managers, notaries and business agents who simply manage their clients' funds and do not engage in ordinary banking business in full. The license can be used as an analogue of an EMI license, which can be issued in the European Union, and is of considerable interest to entrepreneurs who intend to register a firm for financial activities and obtain an EMI license in Switzerland. Therefore, let's take a closer look at the requirements for obtaining this license.
Organizational and audit requirements
To apply for a fintech license, you must first register a company in Switzerland, which must be operated from Switzerland. The company must also establish independent risk management functions. Interestingly, this point can be removed if business is characterized by a low level of risk and its gross income does not exceed CHF 1.5 million.
Unlike banks, auditors have lower requirements for fintech license companies. In addition, reports for these companies have to be prepared in accordance with Swiss corporate law, which is more lenient than banking law.
Fintech license holders must provide a minimum capital of at least 3% of deposits accepted from customers. At the same time, this amount must not be less than the paid-up capital of CHF 300,000.
Management structure
The governing body of the company must consist of at least three members. In order to obtain a fintech license in Switzerland, it is not necessary for the board of directors to be completely independent of the top executive, however, at least one third of the board should not be part of the management, but in some cases FINMA is ready to kindly make some exceptions. Enjoy, you are in Switzerland!
Comment and closing remarks
A specific type of license allows a more creative approach to the financial services industry, and this distinguishes Switzerland from the same European Union, which has a specific and strict regime for starting a business to provide electronic payment services.
The fundamentally different approach of Swiss regulation makes the fintech license more flexible, and protects it from rapid obsolescence in a changing world of technology.
Learn more about how to obtain a Swiss EMI license from IncFine experts during a personal legal consultation on financial business in Switzerland. Our seasoned specialists accompany clients at all stages of registration of companies for financial activities in Switzerland, provide assistance in obtaining licenses, as well as provide other related legal services.
To consult a lawyer on applying for an EMI license in Switzerland, please contact us right now using the form below.
