Self-Regulatory Organization (SRO)
In Switzerland, a self-regulatory organization is a FINMA-supervised body that admits and monitors financial intermediaries for anti-money-laundering purposes. Membership is the supervision route for intermediaries that do not hold, and do not need, a full FINMA license.
Also called: Swiss SRO
Swiss anti-money-laundering law requires a financial intermediary to be supervised. For intermediaries that are not banks, securities firms or insurers, that supervision comes from membership of a self-regulatory organization rather than directly from FINMA. The SRO is itself recognized and overseen by FINMA, so supervision runs from the regulator through the SRO to the member.
An SRO admits members, sets AML rules and codes of conduct that bind them, inspects and audits them, and can sanction or expel a member that does not comply. Expulsion is serious: an intermediary with no AML supervision cannot lawfully carry on the activity.
The term carries a different meaning in other markets — in the United States it describes bodies such as FINRA that supervise securities firms — so the Swiss sense should not be assumed elsewhere.
In practice
Swiss SRO membership provides AML supervision for a financial intermediary. It is not a FINMA license and does not permit banking, securities or other licensed activity: a firm whose business needs one of those licenses still needs it, membership or not.
Commonly confused with
| Term | How it differs |
|---|---|
| FINMA | FINMA is the Swiss federal regulator and grants licenses; an SRO is a private body FINMA recognizes to carry out AML supervision of its members. |
See also
- FINMAThe Swiss Financial Market Supervisory Authority, Switzerland’s integrated financial regulator. FINMA licenses banks, securities firms and fintech licensees, and authorizes and oversees the self-regulatory organizations that supervise other financial intermediaries for anti-money-laundering purposes. Most payment firms in Switzerland therefore deal with an SRO rather than with FINMA directly.
- Financial IntermediaryUnder Swiss anti-money-laundering law, a financial intermediary is either a prudentially supervised institution such as a bank, securities firm or fund manager, or any other person who on a professional basis accepts, holds or helps transfer assets belonging to someone else. Only the second group joins a self-regulatory organization.
- Anti-Money LaunderingAnti-money laundering, usually shortened to AML, is the body of law, regulation and internal controls requiring financial firms to detect, prevent and report attempts to disguise the origin of criminal proceeds. It is an obligation placed on the firm, not a product the firm can buy.
- Virtual Asset Service ProviderA virtual asset service provider, or VASP, is the FATF category for a business that exchanges, transfers, safekeeps or administers virtual assets for other people, or provides financial services around their issuance. It is an international standard-setter’s term, not a license.