AML laws and regulations and its duty of due diligence applies if the service provider maintains the private key.
Custodian wallet provider: AMLA applies (Supervision & AML)
- provides safekeeping and enables clients to send and receive crypto assets
- if order the transfer of cryptocurrencies for clients, a payments transaction service is provided
- has access to clients’ private keys (custody), thus has power to dispose over third-party assets
- includes providers whose signature is required to execute the transaction (multi-sig)
- must affiliate with an SRO or be directly subject to FINMA supervision
- triggers AMLA duty of due diligence (KYC)
- Relaxation for issuers of payment instruments: payments < CHF 3,000 per customer/year (Art. 12(2)(d) AMLO-FINMA) in relation to the duty of diligence
Non-custodian wallet provider: AMLA does not apply
- do not keep or have access to clients’ private keys – cannot view or access clients’ wallets
- provide software but not involved in transfer of assets
- clients transfer in peer-to-peer transaction without wallet providers’ involvement
- not regarded as a financial intermediary because no power of disposal over third-party assets is given
- not subject to AMLA and its duty of due diligence