Swiss regulator FINMA revises rules for customer onboarding via digital channels

Maria Nikolova

The regulator opens consultation into the new rules that will be open until March 28, 2018.

The Swiss Financial Market Supervisory Authority (FINMA) has earlier today announced that it is proposing changes to the requirements for client onboarding via digital channels to reflect advances in technology.

The regulator has published an amended circular which takes into account the latest developments in the technology field and ensures that innovative capacity, technology neutrality and effective money-laundering prevention are maintained.

The new circular amends the FINMA Circular 2016/7 “Video and online identification”, which entered into force on March 18, 2016. Since then, feedback has been received on its application. Initial experiences in connection with video and online identification have shown that some of the rules are not yet or are no longer optimally suited to financial markets or financial intermediaries.

The circular is therefore being amended.

Regarding video identification, no fewer than three randomly selected optical security features contained in the identification documentation should now be verified. This is to guarantee reliable identification and prevent the use of false identification documents. In addition, form-related features such as layout, spelling and font must now be collated with an identity document database.

Also, during the identification process, verification of the contracting party using a transaction number (TAN) is no longer required. The identity of the contracting party is ascertained using cross-checks and the verification of identification documents.

The video identification process may still be carried out despite evidence of a higher risk level in certain cases. However, the business relationship may be established only after the consent of the line manager, a superior instance or senior management.

During the process of online identification, the financial intermediary will compare the identification documentation with an identity document database. They will also check the authenticity of the identification documents using three optical security features, insofar as they are perceptible from the digital image. On top of that, the financial intermediary must make sure that the contracting party’s photo has been created in the course of the identification process (e.g. by using “liveness” detection).

A payment transfer from a Swiss-based bank will no longer be required. Under specific rules, a payment transfer from a bank based in a Financial Action Task Force (FATF) member country will be considered sufficient provided that the relevant country has, in terms of technical compliance, been rated by the FATF as partially compliant or better with respect to the FATF Recommendations on Customer due diligence and Wire transfers. Also, countries that have completed the fourth round of mutual evaluation must have their anti-money laundering and combating the financing of terrorism (AML/CFT) system rated as moderate or better under Immediate Outcome 3 (Supervision) and 4 (Preventive measures).

FINMA is launching a consultation on the changes which runs until March 28, 2018.

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