The Swiss Financial Market Supervisory Authority (FINMA) aims to expand the list of accepted procedures for digital identification of financial intermediaries’ clients. Today, the regulator announced that it is amending the due diligence requirements for client onboarding via digital channels to take account of technological developments.
To this end, FINMA is revising the Circular on “Video and online identification” and holding a consultation up to February 1, 2021.
There have been further technological advances since FINMA Circular 2016/7 “Video and online identification” entered into force. The partial revision of the Circular takes account of these developments, so that the ability to innovate, technology neutrality and effective combating of money laundering can continue to be guaranteed. FINMA is holding a consultation up to 1 February 2021.
Specifically, according to FINMA, financial intermediaries should be enabled to automate their identification processes further while maintaining at least the same security level and to improve their scaling. Therefore, an additional possibility for online identification is now available to the financial intermediaries, namely scanning the client’s biometric passport chip.
Circular 2016/7 “Video and online identification” entered into force on 18 March 2016 and was partially revised for the first time on 20 June 2018. To take account of technological developments, the Circular is reviewed regularly to identify any potential need for adjustment. The aim of this second partial revision is to introduce an additional possibility for online identification.
The financial intermediary may forego the transfer of money from an existing bank account in order to verify the client’s identity if it scans the client’s biometric passport chip. For this purpose, clients scan their biometric passport chip with a smartphone app and transmit their personal data and photo (but no other biometric data) to the financial intermediary. This permits an entirely automated online identification with a high level of security.
The amendments are due to enter into force in mid-2021.
The regulator notes that the need for accompanying security requirements for online identification (such as a bank transfer or scanning of the biometric identification document chip) is essentially upheld. Completely dispensing with these accompanying elements would reduce the security level of digital onboarding and facilitate abuse. These additional requirements take in particular into account the fact that the inhibition threshold for attempting abuse is lower in the digital environment due to the lack of personal contact than with in-person identification.