Unauthorised activities

Besides supervising licence holders, FINMA’s remit also includes taking action against companies and individuals engaged in financial market activities without the requisite licence.

Financial market legislation states that conducting certain business activities requires authorisation from FINMA. For example, an individual who accepts deposits from more than 20 people or advertises this form of activity must normally be issued with a FINMA banking licence. Since 1 August 2017, however, companies may accept deposits of up to CHF 1 million without any authorisation (sandbox). In this sector, companies are not placed under FINMA supervision and there is no depositor protection scheme for these deposits. Where authorisation is granted, FINMA places licensed providers under intensive or less intensive supervision.

Unauthorised providers

It is an unfortunate fact that there are companies and individuals in the marketplace providing financial services without the requisite licence. Many are not legitimate businesses, and it is quite common for them to entice investors into handing over capital, particularly through making deposits, with the promise of attractive returns. Many of their victims lose much or even all of their investments. Generally, such providers lack the know-how, organisation and infrastructure required by law. They often turn out to be pyramid (Ponzi) schemes or fronts for criminal activity.

FINMA’s response

FINMA enforces financial market law by dealing with these unauthorised activities. It acts on reports received and can conduct in-depth investigations. If these confirm initial suspicions, they can lead to enforcement proceedings and specific measures being taken.

However, investors themselves can reduce their risk of falling victim to unauthorised financial service providers by observing some basic rules.