A peculiar feature of the Swiss regulatory framework are Self-Regulatory Organizations (SROs). They play a vital role in overseeing the compliance of financial intermediaries which are not subject to prudential supervision with the Anti-Money Laundering Act (AMLA). This blog explains what SROs are, the requirements for the application process, and how to navigate the process smoothly.

What Are SROs in Switzerland?

SROs are private organizations – usually associations under Swiss private law – that act as the first line of supervision for entities qualifying not as financial institutions but as financial intermediaries. SROs are authorized und supervised by the Swiss Financial Market Supervisory Authority (FINMA). There are currently 11 SROs recognized by FINMA (link to the list)

Professional financial intermediaries under Article 2 para. 3 AMLA must join an SRO recognised by FINMA. They thus become a member of that SROs and are subject to the SROs’ jurisdiction. They have to comply with AMLA and the Anti-Money Laundering Ordinance (AMLO). In addition, some SROs have their own AML Regulation, which must be approved by FINMA.

By joining an SRO, financial intermediaries benefit from a streamlined compliance process while also gaining credibility through adherence to Swiss AML standards. SROs ensure that their members implement robust anti-money laundering (AML) measures, thus contributing to the integrity of the Swiss financial market. For business models not subject to prudential regulation SRO membership serves as a kind of entry-level supervision.

Key Requirements for the SRO Application Process

Applying for membership with an SRO requires fulfilling several regulatory requirements. The application process typically takes 2 to 4 months, and applicants must meet the following criteria:

• AML Officer: The appointment of an AML officer is mandatory for all financial intermediaries. This officer must be a resident of Switzerland, although this role can be outsourced to an external service provider outside the organization. The AML officer is responsible for ensuring that the company adheres to all AML compliance standards and is the contact person for the SRO.

• AML Auditor: Financial intermediaries are also required to appoint an independent AML auditor. This auditor will review the company’s AML procedures and report to the SRO on their effectiveness. Each SRO has a list of approved AML auditors.

• Internal AML Policy: Financial intermediaries, especially VASPs, need to establish an internal AML policy. This policy outlines the procedures for monitoring transactions, identifying suspicious activities, conducting due diligence on clients, and define responsibilities (including reporting suspicions to MROS). It is the key document for the organization of the internal AML process.

• Implementation of an Internal AML Process: Beyond having an AML policy, companies must demonstrate the practical implementation of their internal AML processes. This includes training staff, maintaining records, and ensuring continuous monitoring of client activities. An effective internal AML process minimizes the risk of money laundering activities and ensures compliance with Swiss AML regulations.

• Regulatory Clearance: The SROs usually require a legal opinion from a specialized law firm on the regulatory status of the business model. Such an opinion explains why the business model is not subject to prudential supervision and therefore does not require a FINMA license. SROs sometimes require a FINMA non-action letter, a process with can take up to 6 months to complete.

Our Support for Your SRO Application

Navigating the SRO application process can be complex, but with the right guidance, it becomes manageable. We have successfully supported numerous companies in obtaining SRO membership, leveraging our deep understanding of the requirements and our well-established relationships with various SROs in Switzerland.

In addition to assisting with the application process, including the preparation of a regulatory legal opinion and drafting of the internal AML policy, we have a network of external AML officers and AML auditors that can be engaged as required. Our comprehensive support package is usually available at a fixed price, ensuring transparency and predictability of costs.

If you are looking to become a member of an SRO and ensure compliance with Swiss AML regulations, contact our experts Sebastian Wälti or Hans Kuhn to learn more about how we can facilitate your SRO application and support your ongoing compliance needs.

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