Switzerland Sticks to Tougher ID Checks for Crypto to Cash Transactions
The Swiss financial regulator is extending money-laundering checks for crypto transactions despite significant pushback from the country’s users.
A threshold of 1,000 Swiss francs ($1,000) over which customers will have to prove their identity will now apply to all linked transactions over a month, when crypto is swapped for cash or another anonymous form of money.
“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 the new rules weren't neutral between different technologies, and that stores of customer data would be prone to hacking.
Finma said it today “stands by” its plans, and declined requests to increase the threshold to as much a 25,000 francs, but conceded the new rules would only need apply in anonymous transactions such as 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.
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