Commentaries

FINMA may publish a press release concerning the closure of enforcement proceedings against a named subject, in particular to show the public that it is not inactive in the face of violations of financial market law (2C_682/2023 intended for publication). FINMA closes enforcement proceedings against a bank that has seriously violated money laundering regulations. A few weeks later, the regulator informs the bank of its intention to publish a press release on the proceedings six days later. The draft press[...]

In ruling 4A_57/2024, the Swiss Federal Supreme Court held that an arbitration award ordering the debtor of an outstanding loan to pay interest at a rate of 24% was not contrary to Swiss public policy within the meaning of Art. V ch. 2 let. b of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NYC). Two Chinese companies had entered into a loan agreement for a period of 2 months, with an interest rate of[...]

In a recent decision, the Swiss Federal Supreme Court ruled on the question of whether the person identified in form A as the beneficial owner of assets deposited in a bank account can claim ownership of these assets in enforcement proceedings on this basis alone (decision 5A_208/2023 of July 10, 2024). This ruling arose from taxation proceedings against B and C, in which the Geneva Cantonal Tax Administration (AFC-GE) requested - and obtained - the sequestration of three bank accounts[...]

The question has long been posed by legal scholars: what happens to a criminal prosecution brought against a company when the latter, in one way or another, disappears? The Court of Appeal of the Federal Criminal Court addressed this issue in a decision dated August 19, 2024 (CN.2024.18). It ruled that the takeover of one company by another - i.e., a merger by absorption within the meaning ofart. 3 para. 1 let. a FusG - did not extinguish the criminal[...]

In ruling ACJC/1002/2024 of 19 August 2024, the Geneva Court of Justice considers that the question of the obligation to return retrocessions in an execution-only relationship, which is controversial in the legal literature and the subject of divergent cantonal rulings, may remain undecided due to a valid waiver by the client. Since 2008, a customer and a Geneva bank have been bound by a simple bank custody agreement (execution only). The bank amended its general terms and conditions several times[...]

The Swiss Federal Supreme Court has upheld the immediate dismissal of a Ticino bank manager, initially on the basis of mere suspicion, on the basis of formal procedural rules (ruling 4A_399/2022 of June 3, 2024). The employee had been working since June 2008 as investment manager of a bank's Lugano branch, and then as manager of the branch from June 2013. On that date, the parties agreed, among other things, a salary of CHF 400,000 per annum with a minimum[...]

Federal Court decisions 7B_158/2023 and 7B_874/2023 of 6 August 2024 were handed down in the same case, by the2nd Criminal Court, in the context of a sealing procedure. The first, intended for publication, seems convincing to us, unlike the second. For once - and this is important - the criminal proceedings were not opened for money laundering but for breach of the law against unfair competition. In short, the Zurich Public Prosecutor's Office suspects an individual, who is understood to[...]

In ruling ACJC/201/2024 of February 13, 2024, the Geneva Court of Justice confirms the validity of a clause excluding the benefit of real discussion (beneficium excussionis realis), under which the bank is free to choose between taking action against the customer personally (and thus attacking his entire estate) or realizing the pledged assets in his bank account. The facts are as follows: On May 4, 2013, a Saudi customer entered into a framework credit facility agreement and a deed of[...]

The Federal Administrative Court (FAT) has confirmed that comparis.ch AG (Comparis) qualifies as an insurance intermediary within the meaning of Art. 40 para. 1 ISA on the basis of the services it offers and must therefore be entered in FINMA's public register of unrelated intermediaries (ruling B-5886/2023 of 5 July 2024). In September 2023, FINMA decided that Comparis was an insurance intermediary within the meaning of Art. 40 ISA and ordered it to be entered in the register of non-related[...]

On 20 August 2024, Switzerland enters a new era in bank transfers, with the introduction of Instant Payments. Around 70 banks (representing more than 98% of payments in Switzerland) will accept such payments ‘in real time’. The technical implementation of instant payments in Switzerland is based on the new ‘SIC5’ payment platform developed by SIX, the operator of the Swiss stock exchange, and the Swiss National Bank (SNB). Instant payments are coming late to Switzerland. In fact, this system is[...]

When the bank liquidates the customer's positions and the result is a negative balance, it is up to the bank to prove the losses. Otherwise, the bank does not prove the existence of its claim against the customer (judgment 4A_301/2023 of 16 July 2024). In 2011, a client used a Vaud bank's IT platform to speculate on fluctuations in the USD/CHF exchange rate. On 15 January, the SNB announced that it was abandoning the CHF/EUR floor rate. This caused panic[...]

In a recent ruling 4A_26/2024 of 11 June 2024, the Swiss Federal Supreme Court was called upon to rule on the interpretation of a confidentiality clause contained in a settlement agreement between a bank and a private investigator. Specifically, the key question was whether the parties intended to protect secret information in the formal or material sense. In 2019, a company active in investigation and security services became involved in the "Khan affair", in which it was revealed that Mr[...]

The Swiss Federal Supreme Court has upheld the immediate dismissal of an employee due to his careless application of the bank's anti-money laundering rules (ruling 4A_67/2023 of 12 June 2024). The employee had been working in the Panamanian branch of a Ticino bank since July 2012. He received two warnings, the first on 19 June 2015 following an angry outburst towards an employee in the Legal & Compliance department, and the second on 24 July 2017 for his carelessness in[...]

On 26 July 2024, FINMA published Supervisory Notice 06/2024 on stablecoins. The communication covers the legal categorisation of stablecoins, the application of the anti-money laundering provisions, FINMA's practice with regard to default risk guarantees and the associated risks. This communication, which does not really contain anything new, is nevertheless a useful compendium of the Authority's practice developed since the publication of the Supplement to the Practical Guide for reporting issues relating to initial coin offerings (ICOs) on 11 September 2019.[...]

In a recent ruling on enforcement, the Federal Supreme Court ruled on the question of whether a personal guarantee for an unlimited amount, subject to foreign law, is compatible with Swiss public policy (ruling 4A_650/2023 of 13 May 2024). On 8 December 2010, A, domiciled in the United Arab Emirates, signed a personal guarantee contract in favour of an Emirati bank by which he guaranteed a loan granted by the bank to a company. The contract - subject to UAE[...]

After more than three years of legislative gestation, the European regulation on artificial intelligence has finally been published in the Official Journal. It is directly applicable to all EU Member States, without the need for transposition into national law. There are transitional arrangements for certain players and requirements (cf. timeline). The Regulation represents the first regulatory framework to apply generally to artificial intelligence systems (AIS), as defined below. This regulation marks a major turning point, also for Swiss financial services[...]

In its judgments 4A_574/2023 and 4A_576/2023 of 24 May 2024, the Swiss Federal Supreme Court has upheld a ruling by the Zurich Handelsgericht (HG210069-O) specifying the conditions under which a waiver of retrocessions is valid outside asset management. The Handelsgericht had left open the question of whether the relationship between the parties was one of investment advice or a simple account/custody account, since in both cases the bank had to return the retrocessions. In its ruling, the Federal Court did[...]

The Geneva Court of Justice recently handed down a ruling on international mutual assistance in civil matters (ACJC/483/2024), in which it refused to consider a letter rogatory as abusive and/or likely to undermine Swiss sovereignty or security (art. 12 al. 1 let. b CLaH70). Alice and Bernard are nationals of State F and have refugee status in Switzerland due to judicial and extra-judicial persecution by the authorities of F. In 2012, F requested mutual assistance in criminal matters from Switzerland[...]

The RGPD also protects the banking data of legal entities when the beneficial owner objects to the transfer of the data to the Department of Justice (judgment no. 141/23-II-CIV of 6 December 2023 of the Luxembourg Superior Court of Justice). A person holds bank accounts with the Luxembourg branch of a Swiss bank. He is also the beneficial owner of a company which has two bank accounts with this branch. Another company, of which the customer's ex-wife and son are[...]

There is nothing new about the fact that an asset manager who engages in churning is liable to a criminal conviction (disloyal management - art. 158 of the Swiss Criminal Code). In its ruling 6B_1118/2023 of 26 April 2024, the Swiss Federal Supreme Court analysed in detail the evidence that would allow a churning activity to be identified or ruled out, i.e. carrying out a large number of transactions with the sole aim of increasing retrocessions. Between 2003 and 2005,[...]

On 22 May 2024, the Federal Council published the bill revising the anti-money laundering provisions. The revision comprises two parts. The first follows on from the amendment of FATF Recommendation 24 on the transparency of legal persons in early 2022. It provides for the introduction of a federal register of beneficial owners of companies, by means of a new law on the transparency of legal persons and the identification of beneficial owners (P-LTPM). The second part consists of several amendments[...]

Since March 2020, more than 100,000 Swiss companies have made use of the bonded loans set up by the Confederation to make up for a lack of liquidity following the COVID-19 pandemic. The Swiss authorities' desire to respond quickly to an exceptional situation and to ensure rapid access to funds led them to introduce a facilitated procedure, based essentially on a self-declaration by the credit applicant, which has unfortunately seen its share of abuses. In a recent ruling to be[...]

The MROS Annual Report 2023 has been published discreetly. Only certain points are commented on. The statistics include 11,876 communications corresponding to 21,500 business relationships (+56%, a tenfold increase in 10 years), 90.5% of which came from banks, while asset managers, lawyers, notaries and trustees remain largely under-represented. Fraud remains the leading predicate offence (see this analysis). 14.5% of reports concerned crypto-currencies, the importance of which is probably underestimated (see this specific report, commented on in Tharin, cdbf.ch/1335/). No surge[...]

From 1 January 2025, banks, insurance companies and financial market infrastructures will have to report cyber attacks to the Federal Office for Cyber Security (FOCS) within 24 hours. The Federal Council has just put out to consultation the draft ordinance that implements art. 74a ff of the Federal Act on Information Security (obligation to report cyber attacks). As we explained earlier (see Hirsch, cdbf.ch/1261), banks will now have to inform the OFCS in the event of a cyber attack. The[...]

FINMA has published a draft of a new circular entitled "Rules of Conduct under the Investment Services Financing Act and the Investment Services Financing Ordinance". The aim of the draft is to enhance legal certainty two years after the end of the transitional period following the entry into force of these standards and the first prudential audit cycle on this subject. Overall, it is a relatively modest project. Rather than extending the scope or providing a general commentary, it is[...]

A few days ago, members of the Swiss Bankers Association (SBA) were given an overview of the CDB Supervisory Commission's (hereinafter referred to as the Commission) "leading cases" for the period from 1 July to 31 December 2023. Despite the relatively limited content, a few points are worth noting. On procedural issues, the only decision mentioned by the Commission recalls that, pursuant to article 13 of its rules of procedure, it decides in principle on the basis of the file[...]

The Geneva Court of Justice dismisses a client's case concerning a margin call. The Court qualified the contract as execution only, exonerating the bank from monitoring the positions and warning the customer. Without a stop loss, the bank was not obliged to liquidate the positions automatically (ACJC/378/2024 of 16 March 2024). A client entered into a business relationship with a Geneva bank in 2016. They signed an investment advice agreement in March 2018. In autumn 2018, the client undertook future[...]

In its report of 10 April 2024 on bank stability, the Federal Council proposes the development of a senior managers' regime (SMR) as part of the "Too Big To Fail" (TBTF) framework. An SMR assigns specific responsibilities to the most senior managers and makes it easier for the supervisory authorities to identify those at fault. This commentary focuses on one of the 37 measures analysed by the Federal Council in its report (for a general commentary on the report, see[...]

In its ruling HG210122-O, the Zurich Handelsgericht rejected a company's claim for damages against a former private bank, on the grounds that no prior offence had been proven and that the bank had fulfilled its obligations in terms of combating money laundering. The company alleged that it had been defrauded by one of its suppliers in connection with a sale of fertilisers, as the products ordered never arrived. Part of the funds from this sale was transferred to a third-party[...]

Obtaining the relevant extracts from the database needed to assess FINMA's guarantees of irreproachable activity (formerly Watchlist) is a real crossroads for an employee who has temporarily given up exercising an activity subject to FINMA. The Federal Administrative Court (FAT) has confirmed that art. 8 aLPD (now art. 25 LPD) does not allow access to the documents that justified inclusion on the Watchlist to the same extent as in a genuine procedure on the merits to determine whether an individual[...]