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Switzerland Sticks to Tougher ID Checks for Crypto to Cash Transactions
Customers will be subject to the checks if they make transactions that total $1,000 or more over the course of a month.
Updated Nov 2, 2022, 3:14 p.m. Published Nov 2, 2022, 12:19 p.m.
The Swiss financial regulator is extending money-laundering checks for crypto transactions despite significant pushback from the country’s users.
Customers will have to prove their identity if they make transactions that total 1,000 Swiss francs ($1,000) or more over the course of a month when they swap crypto for cash or another anonymous form of money.
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“Virtual currencies are often used as a payment instrument for illicit trade, notably in drug trafficking, on the darknet, or for the payment of ransoms after cyberattacks,” a report issued by the Financial Market Supervisory Authority (Finma) said. “The risk of money laundering in the domain of virtual currency is reinforced by potential anonymity and by the speed and cross-border nature of transactions.”
A consultation published by Finma in May proposed to tighten up the 1,000-franc limit which is currently measured daily, with a view to stopping "smurfing" – the breaking up of a large payment into smaller ones to avoid money-laundering checks.
But the regulator received multiple responses from citizens and crypto companies who said that the new rules weren't neutral between different technologies and that stores of customer data would be prone to hacking.
On Wednesday, Finma said it “stands by” its plans and declined requests to increase the threshold to as much a 25,000 francs, but conceded the new rules would apply only for anonymous transactions such as those on crypto ATMs.
Switzerland has sought to set itself out as a crypto hub, but regulators are keen to shake off its reputation as a site for money laundering, given the historic secrecy of its banking sector.
Read more: No AML Checks For Most Transfers To Unhosted Crypto Wallets, EU Policymakers Decide
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