FINMA has adopted a partially revised version of Circular 2016/7 on video and online identification S1. The update incorporates recent technological developments in identification methods and takes into account the Federal Act on Electronic Identity Credentials and Other Electronic Credentials, known as the E-ID Act, which is due to come into force S1. For Swiss financial institutions and fintech firms under FINMA oversight, this means existing video and online onboarding workflows will need to be reviewed against the revised standard before the E-ID Act takes effect, and compliance, risk and IT functions will all have a stake in how that review is scoped and executed.
What the Revised Circular Changes
Circular 2016/7 has governed how regulated financial institutions verify customer identity through video and online channels since its original issuance, setting out the acceptance criteria, procedural safeguards and risk controls that firms must apply when onboarding clients remotely rather than in person. The partial revision announced by FINMA updates the circular to reflect how identification technology has evolved since it was first written, and to position the framework alongside the forthcoming E-ID Act S1. This is not described as a wholesale rewrite but as a targeted update, which means compliance teams should focus their review on the specific provisions that have changed rather than re-auditing their entire identification process from scratch.
Even a partial revision can have outsized operational consequences when it touches acceptance criteria for identification technology, because those criteria are often embedded directly into vendor contracts, onboarding software configurations and internal control testing scripts. Institutions that treat the circular purely as a legal text to file away risk missing the practical reality that every downstream system referencing the old criteria may need to be checked, updated and re-tested. The earlier this mapping work begins, the less disruptive it will be to ongoing client onboarding volumes.
Why the E-ID Act Changes the Calculus
The E-ID Act introduces a state-backed electronic identity credential framework in Switzerland, and FINMA's decision to revise its identification circular in anticipation of the Act's entry into force signals that regulated firms will need to accommodate E-ID-based identification alongside existing video and online methods S1. Institutions that have invested heavily in video identification infrastructure should treat this as a signal to map how E-ID credentials will interact with, or potentially substitute for, current onboarding checks, rather than assuming the new credential type will simply sit alongside legacy processes unchanged.
This dual-track reality, operating video and online identification alongside an emerging E-ID credential system, raises practical questions that compliance teams should start answering now. How will acceptance of an E-ID credential be documented for audit purposes. Will existing risk-scoring models for remote onboarding need separate calibration for E-ID-based verification. These are not questions FINMA's circular itself will necessarily answer in full, which is why institutions should treat the revision as a prompt to open an internal workstream rather than wait for every detail to be spelled out centrally.
No grace period has been disclosed alongside the revised circular, which puts pressure on compliance and IT teams to move quickly rather than wait for further clarifying guidance. Institutions that delay their gap analysis risk discovering operational shortfalls only once the E-ID Act is already in force, at which point remediation becomes a supervisory issue rather than a planning exercise. The lack of an announced transition window should be read as an instruction to prioritise this review now, ahead of other discretionary compliance projects that carry known timelines.
Operational Steps for Compliance and Risk Teams
The immediate task for Swiss financial institutions is to obtain and read the revised text of Circular 2016/7 in full and compare it line by line against current identification procedures, acceptance criteria, and risk controls. Because FINMA has stated that the revision reflects both technological developments and the E-ID Act, teams should expect changes in at least two dimensions: the technical standards accepted for video and online identification, and the procedural accommodation of E-ID-based credentials once the Act takes effect S1. Each dimension warrants its own workstream, since the technical standards review is largely an IT and vendor-management exercise while the E-ID accommodation work touches legal, policy and client-facing process design.
Compliance officers should also engage legal and risk functions early, since the E-ID Act's entry into force will carry implications beyond identification procedures alone, including how credential data is handled and retained. Firms that treat this purely as an IT workflow update risk missing broader governance questions that FINMA's supervisory review will likely probe once the new regime is operational. Internal audit should also be looped in at this stage, so that the control testing framework used to evidence compliance is updated in parallel with the underlying process changes, rather than retrofitted after the fact.
◆ Key Takeaway
Swiss financial institutions should obtain the revised Circular 2016/7 text now and assign a named owner to map current video and online identification workflows against it before the E-ID Act enters into force.
- Obtain and review the full text of the partially revised FINMA Circular 2016/7 as soon as it is available to internal compliance teams.
- Assign a named owner within compliance or risk management to track E-ID Act implementation timelines and FINMA guidance updates.
- Compare current video and online identification acceptance criteria against the revised circular's provisions line by line.
- Engage legal counsel to assess how E-ID-based credentials will interact with existing customer onboarding and KYC processes.
- Brief IT and onboarding teams on expected changes to identification technology standards well ahead of the E-ID Act's entry into force.
- Document the gap analysis and remediation plan so it can be presented to FINMA on request during supervisory review.
- Monitor FINMA communications closely given that no grace period has yet been disclosed for the revised circular's adoption.
Positioning for a Regime Without a Disclosed Grace Period
The absence of a disclosed transition window changes how Swiss compliance teams should prioritise this update relative to other regulatory workstreams. Rather than treating the revised circular as a future obligation to schedule alongside other projects, institutions should treat it as an active compliance gap until a formal gap analysis confirms otherwise. This is particularly relevant for firms that rely heavily on third-party video identification providers, since any required changes to acceptance criteria will need to be negotiated and implemented through those vendor relationships as well as internally, and vendor contract amendment cycles can take longer than internal policy updates.
Firms should also consider how this revision interacts with their broader onboarding strategy, particularly if they operate across multiple Swiss and cross-border channels. A video identification process that was compliant under the prior circular may need adjustment not only for E-ID accommodation but also for the technological developments FINMA has referenced, which could affect accepted document types, liveness checks or session recording requirements. Building a single cross-functional working group to own both strands of change, rather than running them as separate legal and IT initiatives, will reduce the risk of inconsistent interpretation across business lines.
As the E-ID Act moves toward entry into force, FINMA's early revision of its identification circular gives regulated firms a window to adapt proactively rather than reactively. Institutions that start their gap analysis now, rather than waiting for additional interpretive guidance, will be better positioned to demonstrate compliance readiness and avoid the supervisory friction that typically accompanies late adaptation to a new regulatory regime.