Switzerland is one of the most prominent financial center in the world. A major portion of the active financial sector in Switzerland consists of banks, securities brokers, stock exchanges and investment funds.
Historically, the Swiss federal law on banking passed in 1934 clearly stated that bank secrecy fell within the criminal domain. A banker who infringed bank secrecy was subject to imprisonment, thus reinforcing a depositor’s protection in the private sphere. Thus, secrecy was seen as a fundamental right in Switzerland and did not develop for purposes of encouraging tax evasion.
– The Federal Banking Commission (CFB) is the oversight body for banks, securities dealers,
and fund managers.
– The Federal Office of Private Insurance (FOPI) adopted in 1999 a directive specifying
rules for implementing the LBA (OBA-OFAP) and supervises insurance institutions that
provide direct life insurance or offer or distribute shares in investment funds.
– The Swiss Federal Gaming Board (Commission fédérale des maisons de jeu, CFMJ) has
established its own directive specifying rules for implementing the LBA, and it exercises
direct supervision over all casinos.
The Swiss Bankers Association is the primary industry organ and its functions include drawing up binding codes of conduct which define what constitutes good industry practice or ethically correct
management. The SBA was instrumental in formalizing the Agreement on Due Diligence (CDB), which provides standards for diligence prior to engaging external parties, including partnerships and clients. This legislation is similar to US laws on Anti-Money Laundering (AML) and Know Your Customer (KYC).
In turn, FINMA monitors how well banks comply with these codes of conduct. Ultimately, in lieu of a direct enforcement authority (such as the SEC), compliance with industry guidelines is voluntary, however FINMA can discretionarily impose sanctions on institutions for code violations
The Agreement on Due Diligence