Facebook Seeks Payment System License in Switzerland
The Libra Association, an organization that’s comprised of large tech conglomerates like Facebook and PayPal, are seeking a payment system licence from the Swiss Financial Market Supervisory Authority. This information was confirmed through FINMA themselves, noting that they have received a personal request of assessment from the Libra Association. This assessment is slated to be underway, with the Swiss finance authority noting that numerous oversights will need to be accounted before licensing agreements are cleared for approval.
The significant concern from FINMA is that money laundering will skyrocket with not just the Libra coin, but additional global currencies as well. Immediately giving 2.7 Billion People access to digital trading currencies could have extremely adverse effects on not only the markets but global treasuries as well. Facebook’s Libra Coin being unregulated could cause for recessions similar to Greece’s. However, the social media corporation hasn’t expressed any concerns that this extreme could happen. Most analysts would argue otherwise, but luckily the Swiss Finance Authority plans to stop the Libra Association in their laundering attempts.
The Swiss Authority believes that the services imagined by the Libra Association go beyond the average payment system, requiring that new regulation be created to account to the new platform. This would place the Libra Association and a select few other corporations in a new financial classification. New infrastructures for messaging payment systems would enable the Swiss Authority and other regulators worldwide to limit their capabilities with trading. Subsequently, this would help to guarantee that markets wouldn’t collapse.
These limitations could come in the form of the Anti-Money Laundering Act. This act provides FINMA with the basis for their new classification regulation. The company officially stated: “Under the FMIA, all additional services that increase the risks of a payment system must be subject to corresponding additional requirements. This means that all the potential risks of a Swiss payment system, including bank-like risks, can be addressed by imposing appropriate requirements in line with regulation. This relates in particular to capital allocation for market credit, operational risks, risk concentration, liquidity and management of the Libra reserve.”
The Financial Action Taskforce
There could be a clause in the upcoming legislation from Swiss Finance Authority, which would enable the authority not to be responsible for any of the risks related to the Libra association. This indicates that the financial regulator is still concerned that Facebook and its partners would inevitably find loopholes to commit illegal financial crimes. However, with international coordination from authorities, there’s a chance that the Swiss Finance Authority won’t be able to create this clause. Switzerland is known to be a haven for financial purposes, but with Libra, that haven looks to be closed.
The Financial Action Task Force is governing over the internal operations and actions of the Libra Association as well. This will help mitigate the severe risk that is coming with the Libra Coin and will force government authorities to address the impending issue.
The Libra Association retaliated by stating: “The Libra Association will maintain AML guidelines, which its members will be expected to comply with if they choose to provide financial services on the Libra network. The association will set standards for its members to maintain AML and anti-fraud programs and to cooperate with legitimate law enforcement investigations. It will be the responsibility of developers building on the Libra Blockchain to comply with the laws and regulations in the jurisdictions in which they operate.”
The Association’s comments continued with: “Financial inclusion, regulatory compliance, and consumer protection are not competing objectives, but rather work in lockstep with the Association’s goals of offering a simple global currency and financial infrastructure that empowers millions of people.”