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FINMA Regulatory Entity

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FINMA stands for Swiss Financial Market Supervisory Authority. As a federal supervisory authority, it ensures correct compliance with financial regulations in any organization that operates in Switzerland.

As a regulatory body, FINMA was established in 2007 to address all the concerns associated with money laundering. It is even empowering to improve the global financial economy of Switzerland through the collaboration of three major bodies.

Those three bodies are The Federal Office of Private Insurance and AML Control Authority, and third is the Swiss Banking Commission. In short, this regulatory is working as a watchdog. It cooperates with the rest of the financial sectors against any acts of terrorism or illicit crimes.

Introduction about FINMA

FINMA is performing a role where it regulates all the financial bodies currently operating in Switzerland. This includes insurance companies, banking centres, or the currency exchange sectors.

FINMA updates all of its reports to the Federal Department of Finance (FDF) from its headquarters in Bern. The Swiss Government controls FDF, which is run by a board of directors.

FINMA does not just regulate the basic legal, financial system. But it is also contributing to the protection of creditors and investors who are trading in the market. In addition, FINMA is taking some instant countermeasures to mitigate and identify the worst criminal activities leading to financial crimes.


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What are the supervisory objectives of FINMA?

All the supervisory activities performed by FINMA are just in support of the Swiss financial marketplace. They even work for the investors, creditors, or insurance policyholders. They are simply supervising the Swiss financial markets to ensure that they operate correctly and all clients are protected from criminal activity.

FINMA also monitors all those institutions that are at the risk of getting threatened at any point. This monitoring will ensure that the institution is in full control of all those threatening risks.

They even update them about how their entire financial system has been functioning throughout. In short, their main aim is to safeguard and enhance the entire stability of the financial system and promote powerful financial markets.

Implementation and regulation by FINMA

FINMA keeps a strict check on the violation of any supervisory legislation from any side. If they find any evidence, they will investigate and take strict measures against that organization. For FINMA, it is important to restore the law and compliance with it accordingly.

To bring a better resolving solution, FINMA uses all such enforcements available under the administrative law Enforcement for improved implementation.

When necessary, FINMA regulates according to its principles. On a national level, FINMA maintains an effective dialogue with the partner authorities. Professional associations and supervised institutions are also involved in this dialogue.

However, on a global scale, FINMA shows its keen interest in improving the Swiss financial centre and the supervisory system. As a result, they participate in numerous international standard-setting bodies. Moreover, FINMA is quick in responding to the requests for better assistance through different foreign supervisory authorities.

How does FINMA issue licenses?

FINMA issues the license to the authorities, legal entities and the natural person who wants to engage themselves in the activities of the financial market. Accordingly, strict requirements will vary based on the licensing type.

There will be prudential supervision of the insurance companies, licensed banks, collective investment schemes, asset managers or financial institutions. All of them are monitored comprehensively following the risk-based approach to conducting a better monitoring system.

FINMA and its new financial acts

FINMA decided to implement certain provisions for the two financial acts listed below in the year 2020:

  • The Financial Services Act (FinSA)
  • The Financial Institutions Act (FinIA)

The FinSA act is based on certain requirements for financial service providers. When conducting business with clients, service providers should meet all of these requirements. FinIA is all about authorization guidelines for different institutions.

Furthermore, FINMA introduced a few follow-up regulations in the same year as the two above. In that regulation, the threshold value for cryptocurrency exchanges was lowered from the Swiss Franc (CHF). It made its way from 5,000 to around CHF 1,000.

You can look for all such amendments which are available in Anti-Money Laundering Ordinance (AMLO-FINMA). In this way, FINMA aims to mitigate an appropriate rise in financial crime and money laundering through virtual currency exchanges.

How does FINMA participate in international activities?

Active participation of FINMA is also seen in numerous international associations and organizations. The authority is also working with the foreign supervisory authorities to enhance their supervisory cooperation efforts at a superior level.

In their supervision, they manage enforcement proceedings or carry out resolutions for the financial institutions.

FINMA is just fulfilling those international tasks which are linked with their supervisory activity. Their international activities are generally divided into three major areas.

First, being part of international policy & regulatory authority, FINMA participates in numerous international bodies. This is mainly to show their Swiss interest in protecting the investors and creditors on a better level.

In addition, FINMA is also part of all those negotiations and discussions led by the Federal Department of Finance (FDF). These discussions play a major role to protect Switzerland’s interests within international financial matters.

Hence, FINMA shows massive support for the FDF in such negotiations and discussions with the help of experts.

You will also find huge participation of FINMA in enforcement and supervisory proceedings to resolve financial institutions’ concerns. In such proceedings, few other supervisory authorities are also part of it.

Final verdict

To end the discussion, it is obvious that FINMA is aiming to protect all their clients who are part of financial institutions. This includes investors, creditors, and policyholders.

The protection is given against any sort of criminal act, financial offence, or disreputable business practices. All such supervisory activities performed by FINMA are also improving the reputation and competitiveness of the Swiss financial marketplace.

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