Swiss asset management companies after the transition period to FINMA

In line with the Swiss law, entities providing asset management services are necessitated to acquire special permission from the regulative authority FΙNMA to continue running their operations. FINIA sets a period to transit (3 years) for Swiss asset management companies that delivered their services prior to 2020 to send their requests. However, this timeframe expires at the end of 2022, and to date, not a lot of entities have applied for a FINMA license. Now it is getting too late to start preparation of applying and the only available options for latecomers are selling up or closing the business down. Institutions that will continue to deliver their services without an authorization after the end of 2022 will be considered as committing a crime.

2-step authorization process

Before asset management companies in Switzerland apply for mandatory authorization from FΙNMA, an associating with a supervisory organization (SO) is needed. Hence, once all the documentation for the request has been sent to FINMA, it is first delivered to an SO for initial procession. At this stage, SO analyses the request. If it finds that the request is not completed or not duly filled out or that terms and conditions have not been satisfied, the SO will ask the applicant to make amendments. As this procedure can also require some time, FΙNMA recently advised that the request should be sent to an SO by the end of June 2022. When the SO has approved the association, the paperwork is sent to FΙNMA. When all the licensing terms have been followed, FINMA approves its decision it terms of authorizing.

The SOs and FΙNMA scrutinize the description of business as well as the financial statements for the coming 3 years, and the equity obligations grounded on them. It is critical to add these documents to the request and to ensure in their correctness. Even the smallest errors may result in failure to get licensed.

At the end of the day, it is recommended to use expert support if a candidate for licensing has little regulative experience. Often applicants spend a lot of time and effort drawing up a request that the SO rejects grounded on noncompliance with the established obligations. The only way not to fail is thoroughly check the request and its paperwork. The price of doing so is not lesser than looking for expert support from the start.

Alternative variants

You may wonder what are the possible variants for those who have not yet acquired their authorization and have not even initiated the procedure. Along with applying, there are the such possibilities as:

• merge with other companies,
• sell the business,
• withdraw from their core activities.

The current conditions necessitate making quick decisions about the future. Even the choice to close the business would be reasonable in the view of coming penalties. It follows that institutions that have not yet become license holders should now take quick actions – even if they do not want to go on the provision of their services.

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