Commentaries

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,[...]

The world of sustainable finance seems to be in a constant state of flux. New products, neologisms and acronyms follow one another at a pace that can make your head spin. On October 12 alone - by way of example - the G7 expressed its support for a whole series of international initiatives in this field, and the Swiss Confederation issued its first "green" bond. Legal and regulatory news is no exception to this effervescence, and there are already dozens[...]

If the bank executes unauthorized transactions, should the customer file a claim for enforcement or damages? This depends on whether the fraud is internal or external, as stated by the Swiss Federal Supreme Court in ATF 149 III 105 (ruling 4A_407/2021). The facts can be simplified as follows: a relationship manager, in charge of a bank's Turkish desk, carries out transactions (Forex operations, investments, transfers, etc.) on the accounts of several customers, without having received prior orders. In order to[...]

Not comparing an order received by e-mail with one received by post? A serious error, according to Federal Court ruling 4A_425/2021. Following the death of a customer, a Swiss bank required the heirs to send the bank account instructions by post, in order to obtain the signatures of all the heirs. In practice, the account manager has regular telephone conversations with the deceased's son. The latter tells him that the heirs must pay EUR 141,599.85 to the notary in charge[...]

What could Kim Kardashian, Nabilla and the Swiss Federal Supreme Court possibly have in common? Not much, a priori. However, the promotion of online trading courses and cryptoactives concerns all three. The first two have been fined, one for promoting a website offering online trading courses, the other for promoting a cryptoasset. Both failed to inform their subscribers that they were being remunerated for their publication by the companies in question. For its part, the Swiss Federal Supreme Court recently[...]

The Swiss Federal Supreme Court has handed down its ruling (TF 4A_601/2021 of September 8, 2022) in a case followed with some trepidation by practitioners, but without providing a federal jurisprudential answer to the question of whether retrocessions received in the context of an execution-only relationship are subject (or not) to the duty of restitution. The suspense was at its height, as the Federal Supreme Court had the opportunity to consider, for the first time to our knowledge, the scope[...]

The end of the summer saw the publication of two Federal Supreme Court rulings concerning civil claims by adhesion to criminal proceedings (6B_1310/2021, summarized in Lawinside.ch/1231 and 4A_417/2021, commented in Lawinside.ch/1232). This case law is of practical importance in banking disputes, where the question regularly arises as to which procedure customers should initiate to assert their civil claims against a bank and its employees. The Court of Criminal Law first ruled that the notion of "civil claims" in art. 122[...]

On the one hand, the head of the US desk who encourages his employee, a senior manager, to prospect for US customers, despite internal rules to the contrary. On the other hand, this executive, who is trained and informed of the risks associated with US persons, continues to travel to the USA to meet potential customers. Following an investigation that lasted almost four years, involving thousands of allegations and the hearing of almost forty witnesses, the Swiss Federal Court weighed[...]

The Swiss Federal Supreme Court recently clarified the application of the rules on the disclosure of holdings in collective investment schemes (art. 120 ff. LIMF) in a ruling 2C_546/2020 of August 18, 2022, intended for publication. In particular, it held that the parent company of a group composed of collective investment schemes must disclose the latter's holdings on a consolidated basis. At issue in this case were two foreign-based financial services companies. The first (the controlled company), based in the[...]

The Asset Management Association Switzerland (AMAS) has published a voluntary sustainability self-regulation aimed at improving the framework conditions for the creation and management of sustainable collective investment schemes (CIS). This self-regulation will come into force on September 30, 2023, and will impose binding guidelines for financial institutions - members of AMAS - that produce and manage PCCs in relation to sustainability. AMAS thus complements the Swiss Bankers Association's self-regulation of sustainability criteria in customer advice (commented in cdbf.ch/1241). For the[...]

In its new Corporate Criminal Enforcement Policies memorandum of October 2022, the DoJ states that priority will be given to the prosecution of individuals, and stresses the importance of companies voluntarily disclosing information about the individuals involved. Only the cooperation of the company under investigation would enable it to benefit from mitigation or exemption from the penalty incurred. In proceedings against foreign companies, the importance of parallel prosecutions by foreign authorities, targeting both the companies and individuals concerned, is also[...]

Can the injured party of a money laundering act committed by a foreign debtor apply for LP sequestration of assets located in Switzerland? In its published decision 5A_709/2018, the Swiss Federal Supreme Court examines the condition of a sufficient link between the claim and Switzerland as a condition for the admissibility of a sequestration under art. 271 para. 1 no. 4 LP. In criminal proceedings in Italy, Marc is accused of breach of trust (appropriazione indebita) for embezzling over EUR[...]

Does the Federal Tax Administration (FTA) have a duty to inform persons who are involved, but not directly targeted, in a request for international administrative assistance ("third parties")? Reading this question may give you a feeling of "déjà vu". And rightly so. The FTA's duty to inform third parties has already been the subject of several decisions, commented on on this site (cf. in particular. ATF 143 II 506 commented in cdbf.ch/982/ and 2C_310/2020 commented in cdbf.ch/1169/). With ruling 2C_825/2019,[...]

In a ruling 5A_13/2022, the Swiss Federal Supreme Court examines whether the beneficiary of claims asserted - in the context of a bank bankruptcy - could or should have recognized the bank's fraudulent intent under art. 288 LP. Anne is a client of Banque Privée Espírito Santo (Suisse) SA, based in the canton of Vaud. This establishment is part of the Espírito Santo group, of which Anne's family is a founding member. In the course of 2014, one of the[...]

In 2012, art. 8 of the Data Protection Act (DPA), which allows access to personal data, was seen as a potential "new weapon" for customers wishing to obtain information from their bank (Fischer in cdbf.ch/821/). In 2020 and 2021, the Federal Court expressly limited this right of access. In the decision commented on here, the Geneva Court of Justice confirms the limits of art. 8 of the DPA, as a customer attempted to use it to gain access to various[...]

In a ruling handed down on April 21, 2022 (4A_412/2021), the Swiss Federal Supreme Court has upheld a decision handed down by the Cantonal Court of the Canton of Vaud, which dismissed a customer's claim against a bank concerning highly leveraged forex transactions (1:100) that caused losses following the abandonment of the CHF/EUR floor rate on January 15, 2015. The dispute focuses on the following four main points. I. Qualification of the contractual relationship The customer complains that the bank[...]

On June 28, 2022, the Swiss Bankers Association (SBA) published two self-regulatory guidelines on sustainable finance for its members. The first guideline concerns the integration of ESG preferences and risks by financial service providers (providers) in their investment advisory and asset management activities. The second directive is aimed at mortgage providers, who are required to address the issue of energy efficiency and the preservation of the long-term value of buildings when granting financing. The present commentary is limited to presenting[...]

In a ruling 4A_525/2021 intended for publication, the Swiss Federal Supreme Court clarifies the scope of res judicata of a first judgment in the context of a second lawsuit concerning a partial action for damages brought by a customer against her bank. Following turbulence on the financial markets in 2018, the foreign currency positions held by a company with a Swiss bank experienced significant fluctuations in value, resulting in insufficient account coverage. On August 10, 2018, the bank sends a[...]

In a ruling 6B_45/2021 of April 27, 2022, the Swiss Federal Supreme Court confirms the conviction (in absentia) of a former bank employee - whom we shall refer to as Albert - for economic intelligence services (Art. 273 StGB) and money laundering (Art. 305bis StGB). In short, Albert was accused of having, between 2005 and 2012, collected and stolen customer data before selling it to the German authorities in summer 2012. Then, in August 2012, he opened an account in[...]

What information can a client receive from her bank in a dispute over a margin call? The Swiss Federal Supreme Court recently addressed this question in ruling 4A_599/2019 (commented in cdbf.ch/1190/). It is now confronted with this question again in ruling 4A_436/2020, which concerns the same set of facts. In October 2012, a Lebanese company opened an account with a Swiss bank. The client invested in "in-house" OTC options and structured products designed and issued by the bank, which was[...]

The Swiss Federal Supreme Court recently examined the scope of a bank's obligation to render an account to its client, not in relation to retrocessions received by the bank (a question which has been the subject of abundant case law, cf. cdbf.ch/1145), but in relation to retrocessions allegedly paid by the bank to a third party (TF 4A_436/2020 of April 28, 2022). This ruling was issued in the context of the contractual relationship between a Lebanese company (client) and a[...]