Switzerland is Strengthening ID Checks for Crypto Transactions

Vignesh Karunanidhi
Switzerland is Strengthening ID Checks for Crypto Transactions
Source: PYMNTS.com

Switzerland has presented itself as a cryptocurrency hub. However, as cryptocurrency adoption increases, so does the fear of cryptocurrency scams and money laundering. The financial regulator in Switzerland has tightened its policy for money-laundering checks. This is for crypto-to-cash transactions, despite the opposition from Swiss crypto users.

As per the details, for transactions exceeding a limit of 1,000 Swiss francs ($1,005), customers will have to disclose their identity. This will be in effect for all linked transactions throughout the month. The scrutiny includes all transactions that involve a conversion like a swap to cash or any other form of money.

Switzerland’s FINMA is worrisome of cryptocurrency used for illicit activities

The Swiss Financial Market Supervisory Authority (FINMA) is worried about the usage of cryptocurrency for illicit trades and other illegal activities, as per the reports.

“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. “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.”

FINMA also proposed a policy in May that was aimed at pumping the brakes on smurfing. It is the process of cutting down large payments into smaller fragments. However, the decision received backlash from the community, warning of customer data being prone to hacks.

FINMA also received requests to increase the threshold limit to 25,000 Swiss francs. Regardless, the regulators were not willing to do so. The new regulations are planned to to into effect in 2023.