May 23, 2024

A Guide to FATF Travel Rule Compliance in Switzerland

A Guide to FATF Travel Rule Compliance in Switzerland
  • The minimum threshold for the FATF Travel Rule in Switzerland is transactions over 1,000 CHF.
  • VASPs must obtain and transmit originator and beneficiary information.
  • Originator info required includes name, account/transaction number, and address or ID details.

Switzerland, a Central European country, has a crypto-enthusiastic population. According to Statista, the number of people who own or use cryptocurrencies reached 21% in 2023, up from 10% in 2019. 

Switzerland’s clear regulatory environment, focus on innovation, and economic factors also helped it bag the second spot on the Henley & Partners Crypto Adoption Index with a score of 46.9%. 

When it comes to regulation, the European banking hub requires the country’s crypto sector to comply with its strict standards, which include the FATF Travel Rule, to ensure transparency, financial stability, and customer security.

Background of the Crypto Travel Rule in Switzerland

In 2019, the Swiss Financial Market Supervisory Authority, or FINMA in short, published guidance covering the FATF Travel Rule. With the latest update to the FINMA-AMLO legislation (Article 10), FINMA approved the text requiring the transmission of information on the originator and beneficiary customer along with payment orders. With this, the Crypto Travel Rule came into effect in Switzerland in 2020. 

Key Features of the Travel Rule

According to FINMA guidance, the AML Act has always applied to all blockchain service providers (VASPs), including exchanges, trading platforms, and wallets. The regulator believes the blockchain's inherent anonymity presents increased risks, requiring existing rules on combating money laundering and terrorist financing to apply to blockchain and crypto service providers.

FINMA mandates that organizations register with the regulator, implement Know Your Customer (KYC) processes, conduct extensive customer due diligence (CDD), and follow strict reporting guidelines. Providers must verify their customers' identities, establish the identity of the beneficial owner, and take a risk-based approach to monitoring business relationships. If there is reasonable suspicion of illegal behavior, such as money laundering, providers must report to the Money Laundering Reporting Office Switzerland (MROS).

The basic idea here is to “make it more difficult for sanctioned persons or states to act anonymously in the payment transaction system.”

Compliance Requirements

In Switzerland, the FATF Travel Rule applies to transactions over $1,000 (1,000 CHF), down from $5,000 (5,000 CHF) after an amendment to FINMA’s AML Ordinance in Feb. 2020.For the originator, the following information must be collected and verified:

  • Name
  • Account number or unique transaction reference number
  • The physical address, date and place of birth, client identification number, or national ID number

For the beneficiary, the following information must be collected:

  • Name
  • Account number or unique transaction reference number

The originating VASP must ensure the originator information is complete and accurate and that the beneficiary information is complete. All information should be provided to the counterparty or authorities upon request.For domestic transactions, the originating VASP can provide only the originator's name and transaction reference number as long as it can submit additional information to the beneficiary VASP and authorities within three working days.

Impact on Cryptocurrency Exchanges and Wallets

A VASP, as per the Anti Money Laundering Ordinance (AMLO), is considered to be operating professionally if any of the following applies:- Performing transactions worth more than CHF 2 million per year;- Achieving a gross revenue of over CHF 50,000 in a calendar year;- Unlimited control of third-party funds surpassing CHF 5 million or- Have business relationships with over 20 contractual parties in a calendar year.Now, under FINMA’s AML Act, financial intermediaries are required to obtain a license from the regulator. Different types of crypto licenses available include Exchange licenses, Fintech licenses, Investment fund licenses, and Banking licenses.

Some trading activities require ongoing monitoring by FINMA, which also applies to those who keep crypto from customers in “wallets” and manage accounts. FINMA’s Crypto Travel Rule guidance further applies to non-custodial wallets, self-hosted wallets, or, as FINMA states, external wallets. As per this, VASPs are required to prove the ownership of these wallets when transacting with them. Only after the identity of the wallet owner is verified, the beneficial owner’s identity is established, and address ownership is proved via ‘suitable technical means’ that the VASP is to transact with these external or self-hosted wallets.

Global Context and Comparisons

FATF’s latest report revealed that Switzerland is “Largely Complaint” when it comes to the adoption of the Crypto Travel Rule, like Germany, France, Canada, Hong Kong, Japan, the UK, and the US.

Concluding Thoughts

Switzerland, one of the top 10 economies by GDP per capita ranking, has been seeing a lot of digital innovation thanks to its clear and proactive regulations. With Zug dubbed the Crypto Valley, the country aims to spearhead fintech and blockchain development through its robust regulatory framework, including the Crypto Travel Rule that ensures security.

FAQs on Crypto Travel Rule Compliance in Switzerland

Q1: What is the minimum transaction threshold for the FATF Travel Rule in Switzerland?

The FATF Travel Rule in Switzerland applies to transactions over 1,000 CHF.

Q2: What information must VASPs collect and transmit under the FATF Travel Rule?

VASPs must collect and transmit the originator's name, account/transaction number, address or ID details, and the beneficiary's name and account/transaction number.

Q3: What are the compliance requirements for VASPs in Switzerland regarding the FATF Travel Rule?

VASPs must register with FINMA, implement KYC processes, conduct customer due diligence, verify customer identities, establish the beneficial owner's identity, and report suspicious activities to the Money Laundering Reporting Office Switzerland (MROS). For domestic transactions, they must provide the originator's name and transaction number and submit additional information within three working days if requested.


About Veriscope

Veriscope, the compliance infrastructure on Shyft Network, empowers Virtual Asset Service Providers (VASPs) with the only frictionless solution for complying with the FATF Travel Rule. Enhanced by User Signing, it enables VASPs to directly request cryptographic proof from users’ non-custodial wallets, streamlining the compliance process.

For more information, visit our website and contact our team for a discussion. To keep up-to-date on all things crypto regulations, sign up for our newsletter and follow us on X (Formerly Twitter), LinkedIn, Telegram, and Medium.