The Swiss SRO layer, STEP, and the cost of fighting back

Switzerland's AML self-regulatory organisations and STEP's professional badge sit beside FINMA. Soft membership sanctions, the Steven Long case, and litigation costs that leave clients short.

Charles Pycraft · November 2026 · London

Cover card: The Swiss SRO layer, STEP, and the cost of fighting back. Navy ground with gold badge motif and a small CP mark; title rendered by the site. An investigation by Charles Pycraft The FINMA toolkit piece in this series judges the state supervisor (FINMA: what Switzerland's regulator can and cannot do). This piece is about the membership layer beside it: Switzerland's self-regulatory organisations for anti-money laundering, STEP's professional badge, and what clients face when those routes fail. In December 2016, FATF's Mutual Evaluation Report of Switzerland found that FINMA's "sanction policy for serious violations of AML/CFT obligations remains inadequate, as does that of the OARs" (SROs). It said certain OARs did not adequately weight risk for fiduciaries linked to offshore structures, and that some had never declared AML/CFT sanctions. FATF did not name which SROs it meant. Nothing here suggests VQF was among them. VQF (Verein zur Qualitätssicherung von Finanzdienstleistungen), based in Zug, is a FINMA-recognised SRO under the Anti-Money Laundering Act. Since 1998 it has supervised affiliated non-bank intermediaries for AMLA compliance. That sentence is architecture, not an accusation against any member firm. No member is named. No complaint is discussed. The argued answer, on the public record, is that the self-regulatory and professional-badge machinery is not fit for the protective purpose it implies. Day-to-day AML supervision of large parts of the para-banking world was delegated to industry bodies. Sanctions are private-law and membership-based. When things go wrong, clients often discover that meaningful recovery means funding complex litigation they cannot afford.

FinIA moved the goalposts. Not the whole field.

From 1 January 2020, the Financial Institutions Act (FinIA) required commercial portfolio managers and trustees to obtain a FINMA licence, with ongoing supervision by a FINMA-authorised supervisory organisation after a transitional period. In this piece's assessment, that reform recognised the need for a stronger licensing and supervisory framework for those activities.

AMLA SRO affiliation and FinIA licensing are related but not identical tracks. VQF remains an SRO for intermediaries that must comply with AMLA but fall outside FinIA and FinSA. FINMA authorised FINcontrol Suisse AG as a supervisory organisation on 29 September 2020. Following its merger with OSFIN, the organisation operates as OSFINcontrol AG, jointly owned by VQF and PolyReg.

Parliament and FINMA accepted that trustees and portfolio managers needed a state licence and prudential supervision. The older SRO layer was left in place for other intermediaries. Soft sanctions and risk-weighting problems identified in 2016 were not erased by rebranding the perimeter.

A client who sees "VQF member" or "SRO affiliated" on a website is still looking at AML monitoring by an industry body, not a FINMA licence. FINMA's own materials say as much. Reports and complaints about SRO-affiliated intermediaries go to the SRO. Those intermediaries "are supervised by the SROs where they are affiliated, and not by FINMA."

Who pays the watchers?

SROs are private-law associations. Their disciplinary measures arise under private-law rules and can include warnings, contractual financial penalties, conditions and expulsion. They are not criminal penalties and not FINMA rulings. Funding comes from members.

That creates a familiar tension. The body that polices intermediaries is paid by intermediaries. FINMA's oversight of SROs is real, but it is oversight of the watchers, not direct examination of every member file.

Is that underfunding, or design? Switzerland chose "directed self-regulation" under the Anti-Money Laundering Act: the legislator mandates SROs for specific issues, and FINMA recognises and supervises them. The choice keeps state headcount down and places compliance expertise next to the industry. It also means that when FATF finds inadequate sanctions, the fix is slow, layered and political.

A fair question, not a claim of secret intent: did Switzerland keep the SRO model soft because a harder, fully staffed state AML supervisor would raise costs and slow the para-banking sector that the financial centre sells?

The FinIA licensing of trustees suggests that, for the highest-risk fiduciary roles, the answer eventually became yes, soft was not enough. The rest of the SRO perimeter remains a published soft spot.

Follow the money: who benefits from soft membership sanctions

Self-regulation is not free. It is financed by the supervised intermediaries, but the public material cited here does not establish whether this model costs them less than direct state supervision.

At category level, the beneficiaries of that design are clear on the public architecture. Non-bank intermediaries that sit in the AMLA SRO layer, rather than under a FinIA licence, face private-law discipline first: warnings, contractual penalties, conditions, expulsion. Those are real tools. They are also membership tools. Law firms, fiduciaries, trust and company service providers and other para-banking intermediaries that remain outside FinIA keep a compliance badge without day-to-day FINMA examination of every file. Professional bodies that sell codes, directories and training sell assurance into the same structure. Auditors and compliance consultants price gap analyses against SRO rulebooks rather than against a peer-centre fine tariff.

This is a description of categories and incentives, and it is not a finding against any VQF member. FATF's 2016 Mutual Evaluation did not name which OARs it meant when it found sanctions inadequate. The point is structural. When sanctions are soft and recovery for clients means private litigation, the people who design, badge and sell the structures sit on the comfortable side of the ledger. The client who cannot fund a multi-jurisdictional trust claim sits on the other.

STEP: a global badge. Limited teeth.

STEP, the Society of Trust and Estate Practitioners, is the main global professional body for trust and estate specialists. Sociologist Brooke Harrington, writing in the Guardian on 21 September 2016 and drawing on research published that year as Capital without Borders, described STEP as the profession's principal representative body and placed wealth managers in an ethical grey area of formally legal but socially contested structures: trusts, offshore companies, and tools used to avoid tax, creditors or other claims. Harrington's work does not allege that every STEP member misconducts. It documents a profession organised around defending wealth across borders.

STEP maintains codes of conduct, a complaints process and a disciplinary panel that can impose fines, reprimands, conditions, suspension or exclusion. Public sanctions can appear against a member's directory entry for a period of years. That is real process. It is also membership discipline, not a court, not a statutory compensation scheme, and not a substitute for regulation of reserved legal activities. STEP itself states that it is not a statutory regulator and does not operate a compensation fund.

One concluded case: Steven Long, from STEP exclusion to Southwark

Steven Long, associated with Universal Wealth Preservation in Ipswich, was suspended from STEP membership on 1 November 2017 and permanently excluded on 5 October 2018 after disciplinary investigation into complaints (STEP public updates / Universal Wealth Preservation Q&A). STEP's own public updates described clients unable to retrieve documents or ascertain assets after the business collapsed. The badge was removed. Removing the badge did not put money back. STEP has no compensation fund.

Years of process followed. Police investigation. Prosecution. Steven Long was sentenced at Southwark Crown Court on 17 July 2026 to eight years and four months in prison, after pleading guilty to two counts of fraud by abuse of position. Investigators put the losses at about £11.6 million across 115 victims (BBC News; court reporting). No co-defendant is named here.

That chronology is the fitness test in miniature. Membership discipline arrived first and did not restore client money. Criminal justice arrived later, at public expense. Clients who needed their assets back faced insolvency processes and, if they could afford it, civil claims. The losses crystallised while professional membership arrangements were in place, and subsequent criminal proceedings required public resources. STEP's membership discipline could not itself compensate affected clients.

STEP has also published statements deploring misuse of trusts for financial crime and tax evasion, including after the Panama, Paradise and Pandora Papers. Professional standards documents and economic-crime position papers are not enforcement budgets. STEP's disciplinary powers provide professional accountability, but they cannot replace statutory regulation, civil recovery or a compensation mechanism for affected clients.

Little practical recourse when litigation costs escalate

Clients who discover loss inside a trust, an offshore company stack, or a failed wealth-planning scheme face a stacked set of cheap doors that often close, and an expensive door that sometimes opens.

Regulatory and ombudsman routes, where they exist, are capped, discretionary, or limited to service complaints. Companion pieces in this series set out FINMA's lack of compensation power, the Legal Ombudsman's £50,000 compensation cap in England and Wales, and the SRA Compensation Fund's discretionary ceilings. SRO and professional-body routes can discipline a member. They rarely make a client whole.

Civil litigation is the remaining route. Lord Justice Jackson's Review of Civil Litigation Costs (2010) documented how disproportionate costs already blocked access to justice in ordinary civil claims, and recommended costs management across civil litigation. Even with later costs-management reforms, complex High Court trust litigation, particularly where several jurisdictions are involved, can generate costs in six or seven figures. Reported judgments and practitioner commentary continue to record proportionate-costs anxiety where hearings are short but the bills are not.

A beneficiary who needs disclosure from a protector in one country, a trustee in another, and an underlying company in a third faces multi-jurisdictional fees before any trial on the merits.

The practical rule is brutal and public. Without affordable representation or suitable litigation funding, many individuals face a substantial practical barrier to pursuing complex trust claims. Professional membership, SRO affiliation and supervisory findings may help a claim. They are not the claim. Money keeps flowing through structures that look supervised until someone with a war chest arrives. Until then, the uninsured client carries the shortfall.

Where the supervisory perimeter leaves gaps

Three published features reward careful structuring.

First, different regulated activities fall within different supervisory arrangements, with corresponding differences in licensing, oversight and enforcement. Activities that sit in the SRO/AMLA layer rather than under a FinIA licence face membership discipline first. Activities moved under FinIA face FINMA licensing but still day-to-day supervision by authorised supervisory organisations, not a full bank-style FINMA team on every file.

Second, professional confidentiality and standing rules mean non-parties often cannot obtain records without court process. Automatic exchange of tax information changed what tax authorities see. It did not open private supervisory files to disappointed beneficiaries.

Third, price the enforcement gap. The combination of private disciplinary sanctions, limited compensation routes and potentially substantial litigation costs can affect whether claimants pursue proceedings or accept settlements.

None of that names a firm. It describes incentives published in FATF evaluations, FinIA materials, STEP disciplinary pages and English costs reform.

What should change

1. Bring residual high-risk AMLA intermediaries under the same licensing density as FinIA trustees where the activity warrants it. FinIA already moved commercial portfolio managers and trustees onto a FINMA licence. The argued reading here is that leaving large parts of the para-banking perimeter on private-law SRO discipline repeats the soft spot FATF flagged in 2016.

2. Require SROs to publish anonymised sanction statistics and serious-case summaries as a condition of FINMA recognition. Membership secrecy that hides whether sanctions ever bite is, on this piece's view, incompatible with a protective purpose.

3. Opinion: a statutory or levy-funded last-resort compensation route for clients of SRO-affiliated intermediaries and professional-body members where membership discipline finds serious breach but client money is gone. STEP states it has no compensation fund. An exclusion does not restore £11.6 million. Without a funded path, the public purse and uninsured clients carry the shortfall.

Verdict

On that public record, the self-regulatory and professional-badge machinery is not fit for the protective purpose it implies. STEP's exclusion of Steven Long did not itself restore the approximately £11.6 million investigators put across 115 victims (Southwark Crown Court sentencing, 17 July 2026). Long was later convicted and sentenced to eight years and four months: consequences for him, after years of process. Removing the badge did not put money back. STEP has no compensation fund. Public money funded the police investigation and prosecution that followed the collapse.

The public pays for the failure. The people who caused it seldom do. That is this piece's argued reading of the pattern across soft membership sanctions and costly private litigation, not a claim that every offender escapes, and not a finding against any named living person beyond the concluded Long case already reported.

This field note draws on public FATF evaluations, FINMA and FinIA materials, VQF published descriptions of the Swiss supervisory system, STEP public disciplinary updates, court sentencing reports and access-to-justice materials. It is provided for general information and is not legal advice. No VQF member firm is named.

Sources