Swiss banking self regulation. Swiss Financial Market Supervisory Authority (FINMA). Due Diligence (CDB).

Swiss Banking - Self Regulation

The Swiss banking industry has a long tradition of self-regulation. In collaboration with the Swiss Financial Market Supervisory Authority (FINMA), their regulatory authority, Swiss banks draw up binding codes of conduct which define what constitutes good industry practice or, to put it in more modern terms, ethically correct management. One example of a code of conduct is the Agreement on Due Diligence (CDB). The FINMA monitors the banks' compliance with these codes of conduct. Compliance with suggested guidelines, on the other hand, is voluntary. The FINMA is not involved in such matters.

The basic principles
For decades, Swiss banks have issued codes of conduct governing segments of the industry. The following basic principles apply:

  • It makes sense to have a code of conduct wherever the legislature has left room for one, or where it is in the banks' interests to voluntarily set standards for their conduct.
  • Codes of conduct are submitted to the FINMA prior to being issued and are binding for all banks once approved. The FINMA monitors the banks' compliance with the voluntary codes of conduct through the auditors required by banking law, just as it monitors compliance with laws, ordinances and its own guidelines.
  • The FINMA can impose sanctions on banks for any infringement of the codes of conduct.
  • The banks' codes of conduct are:
    - guidelines approved by the Board of Directors of the Swiss Bankers Association;
    - agreements signed by the banks.

Simple recommendations which do not require FINMA approval and which are not monitored by the FINMA are not classed as codes of conduct.