TLDR: FINMA, the Swiss Financial Market Supervisory Authority, introduced guidance for the crypto industry covering the Travel Rule on August 26, 2019. It went into effect on January 1st, 2020. It requires VASPs to implement the travel rule for transaction amounts above $1000 (1,000 CHF) and prove ownership of non-custodial wallets.
The Swiss Financial Regulator FINMA has been one of the most proactive regulators on crypto assets. Their 2019 Guidance on Payments on the blockchain specifies the overall requirement for institutions to implement the Travel Rule. This has been approved as part of the latest update to the FINMA-AMLO legislation (Article 10) and valid from January 1st, 2020.
Article 10 AMLO-FINMA requires that information about the client and the beneficiary be transmitted with payment orders. The financial intermediary receiving this information then has the opportunity to check the name of the sender against sanction lists, for example. It can also check whether the information for the beneficiary is correct or whether it should return the payment in the event of discrepancies.
They also specifically go further than the FATF requirements and deny the transfer of funds to unregulated wallet providers:
For such systems or such agreements to meet the requirements of Article 10 AMLO-FINMA in future, they would have to involve only service providers who are subject to appropriate anti-money laundering supervision. Unlike the FATF standards, Article 10 AMLO-FINMA 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.
There is an exception for sending to a customer’s own wallet, but proving the beneficial ownership is key.
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. Their ownership of the external wallet must be proven using 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 client relationship, the supervised 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.
On February 7, 2020, FINMA released an amendment to its Anti-Money Laundering Ordinance (AMLO-FINMA), lowering the transaction threshold for the Travel Rule from $5,000 (5,000 CHF) to $1,000 (1,000 CHF).
At Notabene, we can help you prove the ultimate beneficial ownership of your customers’ blockchain accounts.