Commentaries

The Federal Supreme Court's ruling 2C_747/2021 of March 30, 2023 provides an interesting description of the link between breaches of anti-money laundering duties of care and the imposition of a ban on practice under Art. 33 FINMASA. On May 23, 2016, FINMA opened enforcement proceedings against Bruno, who worked as Head of Legal & Compliance at Banque de la Suisse Italienne (BSI). At the end of the enforcement proceedings, FINMA imposed a 3-year ban on Bruno (art. 33 LFINMA). The[...]

In a ruling dated March 30, 2023 (B-4004_2021), the Federal Administrative Court (FAT) found that the additional capital requirements imposed by FINMA on PostFinance SA (PostFinance) on the basis of art. 131b cum 45 let. b of the Capital Adequacy Ordinance (CAO) and its practice set out in FINMA Circular 2019/2 "Interest rate risks - banks" (the Circular) to address the risk of rising interest rates were in accordance with the law. This ruling follows a previous decision by the[...]

A revised version of the Swiss Code of Best Practice (SCBP 2023) has recently been published by economiesuisse. The CSBP is a series of non-binding recommendations, which are primarily aimed at listed companies, but can also serve as a basis for unlisted companies. As in previous editions, the Swiss Bankers Association was involved in drafting the CSBP. As in the case of some of the legal bases newly revised as part of the revision of corporate law, the CSBP as[...]

In 2004 (second partial report of the Commission of Experts, "Sanctions in financial market supervision"), when FINMASA was adopted, and again in December 2014 (FINMA and its regulatory and supervisory activities, report of the Federal Council in response to various postulates), it was decided not to give FINMA the power to impose fines. The Federal Council (report, p. 42) explained its position as follows: "The Federal Council also concludes that FINMA should not be granted the right to impose fines.[...]

The Federal Court's decision 4A_539/2021 of February 21, 2023 is a further illustration of the methodology applied by our High Court to apprehend the legal consequences of fraudulent orders. This ruling enshrines the principle that, when breaches of due diligence attributable to both the customer and the bank are the cause of fraudulent orders executed from the customer's account, the apportionment of damages must be determined by weighing up the respective faults. The factual situation can be summarized as follows.[...]

In a (probably recent) undated decision, FINMA confirms the publication of a press release relating to the closure of enforcement proceedings against an expressly named subject. In particular, this decision allows FINMA to argue that such publication does not constitute a sanction (naming and shaming within the meaning of art. 34 FINMASA), but only information to the public within the meaning of art. 22 FINMASA. At the end of an enforcement procedure, FINMA informs the subject of the procedure that[...]

A wealthy customer and a bank have been doing business for over 30 years. As part of an execution-only contractual relationship, the customer orders forward currency transactions (RUB/JPY and RUB/CHF). On December 16, 2014, due to a sharp fall in the Russian ruble exchange rate, the bank prematurely closes the forward transactions after contacting its customer, resulting in losses for the latter. The customer initiated legal proceedings to claim compensation equivalent to the smaller loss he would have suffered had[...]

In a ruling 1B_509/2022 of March 2, 2023, the Federal Supreme Court was called upon to clarify the scope of attorney-client privilege in the context of internal investigations within financial institutions, an issue it had already outlined, albeit in less detail, in two previous cases (one giving rise to ruling 1B_85/2016 of September 20, 2016, the other to rulings 1B_433/2017 of March 21, 2018 and 1B_453/2018 of February 6, 2019, cf. cdbf.ch/1053). The Geneva Public Prosecutor's Office has been conducting[...]

To what extent can the customer of a bank in bankruptcy request the segregation of his assets from FINMA when his request has been initially rejected by the liquidators? In ruling B-2367/2020 of December 13, 2022 (now in force), the Federal Administrative Court (FAT) addresses this question, analyzing in particular FINMA's powers in a bank failure. On October 21, 2015, a customer of a banking institution instructed his bank to immediately transfer his entire fiduciary deposits to another bank. The[...]

FINMA has just published its annual report, which reviews the year 2022 and outlines the priorities for supervision. These include issues and challenges posed by the current geopolitical context and inflation, money laundering supervision, climate risk and anti-money laundering supervision, and digitization of the financial sector. This last point is the subject of this commentary, which discusses FINMA's practice in relation to cryptoassets and takes stock of artificial intelligence (AI) in the financial sector. FINMA notes an expansion in the[...]

In a ruling dated December 1, 2022 (CA_2022.10), the Appeal Chamber of the Swiss Federal Criminal Court (TPF) found the director (A.) of a company (the issuer) guilty of failing to prevent tokens issued after an ICO from being transferred to participants' wallets, even though neither the issuer nor A. were affiliated to a self-regulatory organization (SRO) in accordance with the MLA. A. was convicted of having intentionally exercised a financial intermediary activity, in a professional capacity, in violation of[...]

A start-up relies on a guarantee from a fictitious bank to carry out a capital increase of around CHF 30 million. The auditor in charge of checking the increase report detects nothing. The Federal Administrative Court (FAT) saw this as a manifest lack of critical thinking and confirmed the withdrawal of the bank's authorization - albeit with a reduced duration - in ruling B-2245/2021 of January 27, 2023 (now in force). In 2016, Caroline - a certified auditor - was[...]

Following the deterioration in relations between a major IT service provider and a Geneva bank, the Court of Justice of the Canton of Geneva recently addressed various issues relating to an IT contract in a ruling dated October 4, 2022 (ACJC/1497/2022). In 2006, a Geneva bank decided to migrate its IT system. It entered into a series of contracts with a Zurich-based company, which was to carry out the migration and then operate the system. The contract is for a[...]

In a ruling 6B_899/2021 of January 26, 2023, handed down after a public hearing but not intended for publication, the Federal Court ruled that a lawyer who produces a six-page document containing a large amount12of information subject to banking secrecy in civil proceedings, without having taken full cognizance of it, commits a breach of banking secrecy (art. 47 al. 1 let. c LB) by possible fraud (art. 12 al. 2 phr. 2 CP). A banking establishment and one of its[...]

The measures adopted by the Federal Council to ensure the takeover of Credit Suisse by UBS represent a significant change of approach from the principles that guided the regulation of systemically important banks after the 2008 financial crisis. The scale of these changes is commensurate with the new crisis that the authorities are seeking to avert. It is all the more astonishing given that, despite the endless list of Credit Suisse defaults revealed in recent years, FINMA and the Swiss[...]

Can an employee who discloses to the media documents protected by professional secrecy and relating to the tax practices of multinationals be recognized as a whistleblower and thus benefit from the full protection of art. 10 ECHR? Yes, says the European Court of Human Rights, which found a violation of this provision by the Luxembourg authorities in Halet v. Luxembourg of February 14, 2023 (no. 21884/18). Between 2012 and 2014, several hundred tax rescripts and tax declarations highlighting highly advantageous[...]

In a ruling 1C_477/2022 of January 30, 2023, intended for publication, the Federal Supreme Court decided to suspend the international mutual assistance proceedings in criminal matters and to uphold the sequestration of funds ordered in Switzerland in June 2020 in execution of a request submitted by the Russian Federation in January 2020. The Federal Supreme Court is ruling on the appeal because it has to answer the general question of what should happen to requests for mutual legal assistance made[...]

Does the right not to incriminate oneself make it possible not to produce bank documents specifically requested by an administrative authority under threat of criminal sanction? No, answers the ECtHR unanimously in the De Legé case of October 4, 2022, no. 58342/15. The story begins with the theft of banking data concerning the assets of Dutch residents deposited with a Luxembourg bank. As a result of criminal proceedings, the Belgian authorities obtained the data, which they then passed on to[...]

When a foreign company holding a bank account has elected domicile with an agent in Switzerland in the context of an administrative assistance procedure, can the Federal Tax Administration (FTA) use the edict procedure to inform its beneficial owner of the existence of the procedure? The Swiss Federal Supreme Court answered this question in the affirmative in a ruling dated November 8, 2022 (2C_772/2021 and 2C_773/2021). The references of the company's bank accounts appeared on the list appended by France[...]

On December 16, 2022, the Federal Council published a Sustainability Report (Rapport) for the years 2022-2025, which takes stock of current measures and makes various recommendations to consolidate Switzerland's position in sustainable finance. Switzerland's strategy comprises fifteen new and existing measures in four areas: Business data on sustainable development: The collection of and access to quality information is a prerequisite for investors to be able to compare financial products and make informed investment decisions. The aim is to improve the[...]

In its recent activity and case law report covering the years 2017 to 2021, the Supervisory Board of the Agreement on the Swiss Banks' Code of Conduct with Regard to the Exercise of Due Diligence (CDB) reminds us at the outset that the provisions of CDB 20 apply only if a new business relationship is opened, or a repetition of due diligence obligations occurs, after January 1, 2020 (art. 69 para. 1 and 70 para. 2 CDB 20). As a[...]

New international standards and strong developments in the field of digitalization. These are the two factors cited by FINMA to justify the revision of its Circular 08/21 on operational risks. Adopted on December 7, 2022, Circular 2023/1 will come into force on January 1, 2024. The new circular distinguishes between the global management of operational risks and the management of specific operational risks. The latter include those related to information and communication technologies (ICT), cyber risks, critical data and, finally,[...]

To what extent can a bank be held liable for the fraudulent conduct of a pseudo-independent asset manager towards the latter's clients when they have no contractual link with the bank (TF 4A_603/2020 of November 16, 2022)? In 1999, a financial intermediary opened an account in his own name with a Swiss bank. He then opened an account in his company's name in 2004. He declares that he is the beneficial owner of the assets deposited. The accounts were to[...]

On November 23, 2022, the Federal Council (FC) adopted the implementing ordinance on climate reporting by large Swiss companies. From January 1, 2024, reporting on climate issues must be integrated and published as part of the report on non-financial issues referred to in Art. 964a to 964c CO. I. Scope of application The scope of the FC Ordinance is defined by Art. 1 para. 1 of the Ordinance, which refers to Art. 964a of the Swiss Code of Obligations. Large[...]

On November 28, 2022, the Council of the European Union approved the Corporate Sustainability Reporting Directive (CSRD). What is this directive, and to what extent are Swiss companies - including banks and financial institutions - affected by it? The CSRD replaces the Non Financial Reporting Directive (NFRD) adopted in 2014. The new directive introduces a number of important new features. This commentary will confine itself to a brief overview of the CSRD, with a particular focus on its extraterritorial scope.[...]

Since September 1, 2020, banks have had to notify FINMA within 24 hours of successful cyber attacks. On December 2, 2022, the Federal Council proposed to Parliament the introduction of a new obligation to report cyberattacks, also within 24 hours, but this time to the Swiss National Center for Cybersecurity (NCSC; cf. art. 74a ff of the draft Information Security Act [P-LSI]). Why this additional obligation? Because it will apply to all critical infrastructures, including banks, insurance companies, financial market[...]

On November 10, 2022, FINMA published its annual risk monitoring report. This report provides information on the seven risks that FINMA considers significant for the financial industry. These include interest-rate risk, credit risk for mortgages, credit risk for other loans, yield spread risk, risks associated with cyber-attacks, anti-money-laundering and sanctions risk, and risk associated with difficulties in accessing foreign markets. Most of the risks mentioned are directly or indirectly linked to this year's tense geopolitical and economic situation. In its[...]

How can the fight against money laundering and the principle of transparency be reconciled with the right to privacy and data protection? The European legislator has failed to strike the right balance in allowing any person access to the register of beneficial owners of companies, according to the European Court of Justice's (CJEU) ruling C-37/20 and C-601/20 of November 22, 2022. In May 2018, the European legislator adopted its 5th Money Laundering Directive (Directive 2015/849 as amended) to make information[...]

On September 28, 2022, the European Commission published its proposal for a directive adapting the rules on non-contractual civil liability to the field of artificial intelligence (P-DIA). It includes rules to facilitate access to evidence on high-risk artificial intelligence (AI) systems, so that claimants are able to prove the various requirements of an extra-contractual civil action under their national law. Could this proposal have a major impact on financial institutions employing artificial intelligence systems? The proposal in no way alters[...]

Can obtaining a COVID credit fraudulently lead to criminal consequences, and if so, what are they? In ruling 6B_295/2022, the Swiss Federal Supreme Court upheld the conviction of a greedy entrepreneur for money laundering. The ruling also provides an opportunity to discuss other criminal offences that may be relevant. A quick (re)contextualization before turning to the case at hand: in March 2020, the COVID-19 pandemic strikes with full force. To help companies affected by this crisis, on March 25, 2020,[...]