Swiss Authorities Declare FlowBank Insolvent Over Violation of Regulations

The Swiss Financial Market Supervisory Authority (FINMA) has declared FlowBank SA, a Swiss firm recognized for offering online brokerage and cryptocurrency exchanging services, insolvent due to its failure to adhere to established regulatory compliances.

FlowBank SA did not uphold the requisite level of capital and battled excess debt, prompting this regulatory response.

The lack of sufficient capital led FINMA to commence proceedings for bankruptcy concerning FlowBank SA. The institution’s financial health progressively worsened, which resulted in its inability to fulfill capitalization standards by late 2023 and into April 2024, as detailed by FINMA. FlowBank SA had been subject to past regulatory actions for not observing laws governing supervision related to capital, organizational weaknesses, and risk management strategies.

Previously in October 2021, FINMA imposed penalties on FlowBank SA for major deviations in maintaining capital levels. Further investigations in June 2023 revealed persistent shortfalls in compliance, manifested by erroneous financial disclosures, inadequate organizational procedures, and a lack of thorough diligence in its business associations.

FINMA has tasked the firm Walder Wyss AG with the liquidation process as part of its efforts to protect the interests of depositors during the bankruptcy. The regulator’s goal is to refund privileged deposits, with a maximum ceiling of CHP 100,000 per customer, using the bank’s remaining assets.

The decision is designed to safeguard client assets in the wake of FlowBank SA’s insolvency. Given the existence of sufficient funds for reimbursement, the Swiss deposit guarantee scheme is anticipated to not be involved.

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