A total of 1,060 institutions comprising portfolio managers and trustees have notified the Swiss Financial Market Supervisory Authority (FINMA) that they
will not be submitting a license application as required by the country’s
Financial Institutions Act (FinIA) which came into force on January 1, 2020.
This is even as the three-year transitional period granted to these
institutions under FinIA to fulfill the licensing conditions and submit a
license application elapsed on December 31, 2022. However, a total of 1,699
firms sent in their applications at the end of last year, FINMA said on
Monday in a press statement and newly-issued guidance.
The Swiss financial regulator said it granted licenses to 670
institutions last year from the application pool, with around 1,000
applications now pending. Of the granted licenses, 642 went to portfolio managers, 22 to trustees and six to institutions acting as portfolio managers
and trustees.
The regulator under FinIA requires portfolio managers and
trustees to obtain affiliation with a licensed independent supervisory
organization (SO) such as FINcontrol Suisse SA before applying for its license. In May last year, the regulator urged concerned institutions to prepare and
submit their applications to the SOs by latest June 30 in order to meet up with
their subsequent FINMA license applications.
Watch the recent FMLS22 session on how regulation will shape the financial industry in 2023.
“FINMA was organizationally prepared for this larger number of
applications. However, due to the large number of pending cases, [and] a longer
FINMA licensing process in particular, longer (initial) response times must be
expected. The processing time as well as the corresponding costs of an
individual application remain highly dependent on its quality and complexity,”
the Swiss regulator explained.
FINMA to Prosecute Unlicensed Portfolio Managers and Trustees
In the Monday statement, FINRA noted that it will initiate criminal prosecution against
portfolio managers and trustees who missed the submission deadline but continue
to operate “on a professional basis” in 2023. However, it added that those that have applied
for the license can continue operating until a decision is reached on their applications.
“The financial penalties or fines resulting from criminal proceedings
could be as high as CHF 250,000,” the Swiss regulator said, adding that since
2020, it has launched 307 investigations against institutions suspected of
operating with authorization.
Meanwhile, Sandra Gasser, KPMG Switzerland’s former Attorney at Law and
Head of Asset Management & Consulting, believes that companies that do
not apply for the required licensing are like to seek a merger with another
financial institution or discontinue their business in the country.
A total of 1,060 institutions comprising portfolio managers and trustees have notified the Swiss Financial Market Supervisory Authority (FINMA) that they
will not be submitting a license application as required by the country’s
Financial Institutions Act (FinIA) which came into force on January 1, 2020.
This is even as the three-year transitional period granted to these
institutions under FinIA to fulfill the licensing conditions and submit a
license application elapsed on December 31, 2022. However, a total of 1,699
firms sent in their applications at the end of last year, FINMA said on
Monday in a press statement and newly-issued guidance.
The Swiss financial regulator said it granted licenses to 670
institutions last year from the application pool, with around 1,000
applications now pending. Of the granted licenses, 642 went to portfolio managers, 22 to trustees and six to institutions acting as portfolio managers
and trustees.
The regulator under FinIA requires portfolio managers and
trustees to obtain affiliation with a licensed independent supervisory
organization (SO) such as FINcontrol Suisse SA before applying for its license. In May last year, the regulator urged concerned institutions to prepare and
submit their applications to the SOs by latest June 30 in order to meet up with
their subsequent FINMA license applications.
Watch the recent FMLS22 session on how regulation will shape the financial industry in 2023.
“FINMA was organizationally prepared for this larger number of
applications. However, due to the large number of pending cases, [and] a longer
FINMA licensing process in particular, longer (initial) response times must be
expected. The processing time as well as the corresponding costs of an
individual application remain highly dependent on its quality and complexity,”
the Swiss regulator explained.
FINMA to Prosecute Unlicensed Portfolio Managers and Trustees
In the Monday statement, FINRA noted that it will initiate criminal prosecution against
portfolio managers and trustees who missed the submission deadline but continue
to operate “on a professional basis” in 2023. However, it added that those that have applied
for the license can continue operating until a decision is reached on their applications.
“The financial penalties or fines resulting from criminal proceedings
could be as high as CHF 250,000,” the Swiss regulator said, adding that since
2020, it has launched 307 investigations against institutions suspected of
operating with authorization.
Meanwhile, Sandra Gasser, KPMG Switzerland’s former Attorney at Law and
Head of Asset Management & Consulting, believes that companies that do
not apply for the required licensing are like to seek a merger with another
financial institution or discontinue their business in the country.
