FINMA-Licensed Trustee

The regulatory framework: FinIA

The Federal Act on Financial Institutions (FinIA), which entered into force on 1 January 2020, introduced for the first time in Switzerland a specific licensing regime for trustees. Before this date, professional trustees carried out their activities without a dedicated regulatory framework, although they were subject to anti-money laundering obligations under the Anti-Money Laundering Act (AMLA) as financial intermediaries.

The FinIA defines a trustee as "anyone who professionally manages or disposes of a separate estate for the benefit of a beneficiary or for a specified purpose on the basis of the instrument creating the trust" (Art. 17 FinIA). This broad definition covers both natural persons and legal entities acting as trustees.

Licensing conditions

To obtain a FINMA licence, a trustee must meet a set of cumulative requirements that ensure the capacity to carry out the activity in a professional and compliant manner:

• Adequate organisation: The trustee must have an appropriate organisational structure with a clear separation of functions, documented internal procedures and an effective internal control system.
• Minimum capital: The trustee must demonstrate sufficient own funds, namely minimum capital of CHF 100,000 for legal entities, and hold adequate professional indemnity insurance.
• Guarantee of irreproachable conduct: The persons responsible for administration and management must be of good repute and possess the professional qualifications required for their role.
• Risk management: The trustee must implement a risk management system proportionate to the nature, size and complexity of its activities.
• AML compliance: The trustee must be affiliated with a self-regulatory organisation (SRO) or directly supervised by FINMA for anti-money laundering and counter-terrorist financing purposes.

Ongoing supervision

Once licensed, the trustee is subject to ongoing prudential supervision by a supervisory organisation (SO) approved by FINMA. This supervision includes regular audits, compliance reviews and on-site inspections. The SO reports to FINMA and may flag any irregularity or breach.

The main obligations of a licensed trustee in terms of supervision include:

• Submission of annual reports to the SO, including audited accounts and a compliance report
• Immediate notification to the SO of any significant event (change of management, major litigation, compliance incidents)
• Cooperation with auditors and inspectors during periodic reviews
• Ongoing maintenance of licensing conditions (own funds, organisation, qualified personnel)

Benefits of FINMA licensing for clients

Choosing a FINMA-licensed trustee offers settlors, beneficiaries and advisers significant safeguards that an unregulated trustee cannot provide:

• Enhanced protection: The licence ensures that the trustee meets high standards of governance, risk management and compliance.
• Transparency: Reporting obligations and periodic audits ensure a high level of transparency in trust management.
• Recourse: In the event of a breach, beneficiaries have recourse to the SO and FINMA, in addition to ordinary civil remedies.
• International credibility: FINMA licensing is internationally recognised as a hallmark of quality and reliability, facilitating interactions with banks, tax authorities and other stakeholders.

The transitional regime

Trustees who were already active before 1 January 2020 were granted a transitional period to comply with the new requirements. This period, initially set to end in 2022, was met by the vast majority of market participants. Trustees who did not obtain a licence within the deadline were required to cease their activities or transfer their mandates to licensed trustees.