New Licensing Requirement for Asset Managers in Switzerland

Until 2020, external and independent asset managers in Switzerland were not required license to operate. They were, however, required to sign up with a relevant industry regulating organisation. To comply with new anti-money laundering measures, that is about to change. Previously, only collective investment scheme managers were required to do so. Parliament rejected a bill that would have provided for “grandfathering” of asset managers operating for 15+ years. The Federal Council did vote in favour of extending some transitional periods, but all affected entities must act now.
 

What is or is Not Covered?

From the 1st January 2020, new regulations require licensing for professionally responsible asset managers. “Professional” is where the Asset Manager:
 

• Takes on or maintains 20+ business relationships in a calendar year
• Acquires over CHF 50,000 in a calendar year
• Manages third-party assets exceeding CHF 5 million

 
Exclusions apply, where assets are managed for group companies, as family assets, on behalf of participation employees or within a regulated, statutory mandate. New FINMA licensing requirements are unrelated to supervision; FINMA may only approve a third-party supervisory organisation once FinIA comes into effect. However, current law requires self-regulatory bodies to join a supervisory organisation by 30th June 2020, with a three-year grace period for making provisions. Asset Managers must operate from Switzerland. If the organising company is part of a wider financial group, such decision-making may be permissible by a foreign body under certain conditions. Only a Swiss resident may represent the asset manager.

Explaining “Appropriate Organisation”

Financial service providers in Switzerland must ensure a robust organisational structure with a system of flexible internal rules. Asset Managers must have a risk management policy and must not have a stake in the financial activities. The organisation must have independent compliance procedures. FINMA requires independent internal audit measures for organisations with over 10 million CHF (gross income). Companies with an income under CHF2 Million and those with 5 full-time employees or fewer (so called Small Asset Managers) may find some compliance activities do not apply.

Explaining Collateral and Capital Requirements

The asset manager should pay in CHF 100,000 (cash) minimum regardless of company type or size and make available minimum 25% of the value of the fixed costs of the most recent annual financial statement from their own funds, including:
 

• Organisation’s operating expenses
• Personnel expenses
• Fixed asset depreciation value
• Adjustments to value, provisions and any losses

 
To a maximum of CHF 10 million.
 
They must be “Sufficiently Qualified” with 5+ years’ experience and minimum 40 hours of formal training. Organisations should ensure at least two members of management meet both requirements and provide a robust succession framework should the managing become unable to fulfil their duties. The Asset Manager should ensure internal conflicts do not permit client discrimination. However, if this is not possible, such grounds must be disclosed. Assuming qualified consent is provided, a total ban will not be imposed.
 
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