VQF (Verein zur Qualitätssicherung von Finanzdienstleistungen, the Financial Services Standards Association) is a self-regulatory organization (SRO) recognized by the Swiss Financial Market Supervisory Authority, FINMA. Swiss financial intermediaries that are not otherwise prudentially supervised can join VQF to meet their obligation to be supervised for anti-money laundering (AML) purposes. Based in Zug, VQF is one of the largest Swiss SROs by membership and has become widely known for supervising cryptocurrency businesses.
Membership of VQF provides AML supervision only. It is not a FINMA license to take deposits, run a bank or operate a trading venue, and it does not confer any right to provide services in the European Union or the European Economic Area.
Legal basis
Switzerland's Anti-Money Laundering Act (AMLA, in German Geldwäschereigesetz or GwG), which entered into force in 1998, applies not only to banks but also to a wide range of "para-banking" financial intermediaries. These include firms that provide payment services, exchange currencies or crypto-assets, grant certain loans, carry out asset management in some forms or hold assets for third parties on a professional basis. The Act requires such intermediaries to be supervised for AML compliance.
Firms already licensed and supervised by FINMA, such as banks and securities firms, are supervised for AML directly by FINMA. Other intermediaries meet the requirement by joining an SRO that FINMA has recognized. FINMA approves each SRO's regulations and oversees how it supervises its members, so the SRO system is a delegated form of state supervision rather than purely private self-regulation. For FINMA's full profile, see the FINMA regulator profile.
How VQF supervision works
A firm applying to VQF must show that it is properly organized to meet Swiss AML rules. The application typically covers the firm's business model, its owners and managers, its internal AML directives and the people responsible for compliance. Once admitted, members must:
- identify customers and establish the beneficial owner of assets, following customer due diligence rules set out in VQF's regulations;
- apply a risk-based approach and carry out additional checks on higher-risk relationships, such as those involving a politically exposed person;
- keep records, train staff and maintain a documented AML program;
- report reasonable suspicions of money laundering to the Money Laundering Reporting Office Switzerland (MROS);
- undergo periodic AML audits by an approved audit firm, similar in purpose to an independent AML review, and pay annual fees.
VQF can sanction members that breach its rules, including by fines and expulsion. A firm that loses its SRO membership and has no other supervision can no longer lawfully carry on its financial intermediary activity in Switzerland.
Role in the crypto sector
From the mid-2010s, many blockchain projects and crypto service providers set up in the Zug area, often called "Crypto Valley". FINMA guidance clarified that exchanging crypto-assets, operating certain wallets and similar services are financial intermediation under the AMLA. Many of these firms joined VQF to obtain AML supervision without holding a banking license. The SRO therefore applies Swiss rules derived from the FATF Travel Rule and expects members to screen transfers involving unhosted wallets.
Limits of VQF membership
Because VQF membership is often mentioned in the marketing of Swiss fintech and crypto firms, its limits are frequently misunderstood:
- It is not prudential supervision; VQF does not monitor members' capital, liquidity or solvency.
- It does not authorize deposit-taking, which in Switzerland requires a banking license or, in limited cases, a FINMA fintech license.
- It does not provide passporting into the EU or EEA. A Swiss firm wishing to serve EU clients under MiCA must obtain authorization in an EU member state.
- It does not make a firm a VASP licensed in other countries, which apply their own registration or licensing rules.
For counterparties carrying out know your business checks on a Swiss firm, confirming VQF membership establishes that the firm is under AML supervision, but not that it holds any license for the activity it performs.