While issuing banking licences to two new blockchain service providers, the Swiss Financial Markets Authority has also published new rules to oblige its firms to apply the national anti-money laundering rules to the area of blockchain technology.

For the first time, FINMA has issued banking and securities dealers’ licences to two pure-play blockchain service providers - SEBA Crypto AG (registered in 'Crypto Valley' in the canton of Zug) and Sygnum AG (registered in Zurich), which will offer services for professional customers (HNW but financial practitioners only). FINMA, like other Western regulators, continues to proclaim itself 'technology-neutral,' i.e. its rules are supposed to apply to financial institutions that use any technology, expressing no preference for one technology or another.

Meanwhile, the new guidelines, which apply in full to the supervision of the two new institutions, dwell on "required information in payment transactions." Article 10 AMLO-FINMA (the AML part of the rulebook) requires firms to transmit information about clients and beneficiaries alongside payment orders. The financial intermediaries that receive this information can then check names of senders against sanction lists and find out whether the beneficial ownership information is correct.

As yet, no system exists at either a national or an international level (such as, for example, SWIFT for interbank transfers) for the reliable transfer of identifying data for payment transactions on the Blockchain. Neither do any bilateral agreements between service providers exist yet. For such systems or such agreements to meet the requirements of Article 10 in future, they would have to involve only service providers that are subject to AML supervision. Unlike the standards of the Financial Action Task Force, Article 10 does not provide for any exception for payments involving unregulated wallet providers. Such an exception would favour unsupervised service providers and would result in supervised providers not being able to prevent problematic payments from being executed.

As long as an institution supervised by FINMA is not able to send and receive the information required in payment transactions, such transactions are only permitted from and to external wallets if these belong to one of the institution’s own customers. The institution must prove his ownership of the external wallet by suitable technical means. Transactions between customers of the same institution are permissible. A transfer from or to an external wallet belonging to a third party is only possible if, as for a relationship with a client, the regulated institution has first verified the identity of the third party, established the identity of the beneficial owner and proven the third party’s ownership of the external wallet using suitable technical means.

If the customer is conducting an exchange (fiat-to-virtual currency, or virtual-to-fiat currency, or virtual-to-virtual currency) and an external wallet is involved in the transaction, the institution must also prove the customer’s ownership of the external wallet by suitable technical means. If such proof is not available, the normal rules for payment transactions apply.