Swiss Banking Secrecy

Criminal Law

The evolution of international economic crime from which Switzerland has not been spared has necessitated a number of additions to the Swiss Penal Code.

1. In the 1980s, a number of clients of Swiss banks were accused under American law of insider trading in the course of stock exchange transactions. The improper use of knowledge of confidential information was not then a punishable offence in Switzerland, and the Treaty on Mutual Judicial Assistance in Criminal Matters concluded with the United States did not allow Swiss courts to waive banking secrecy when letters rogatory were presented. As a consequence, Swiss banks came under severe attack in the American media. As the situation had reached deadlock, the Securities and Exchange Commission (SEC) sent a delegation to Bern.
   
   A provisional solution was agreed upon and incorporated into Convention 16 of the Swiss Bankers Association. This Convention, which was signed by a large majority of banks, allowed them, after a preliminary examination, to put information requested pursuant to investigations in connection with insider trading offences at the SECs disposal. At the same time a commission composed of Swiss lawyers and bankers was established with powers to pass on or withhold the information requested by the SEC. This commission succeeded both in gaining the confidence of the American authorities and in making revelations concerning only the identity of persons who had committed offences. In order to waive banking secrecy, clients who wished to acquire shares on American stock-exchanges had to accept the terms of this Convention. The Convention became obsolete after the introduction in 1988 of Article 161 of the Penal Code which made the use of confidential information for insider trading an offence. Although this article was referred to as a lex americana, it has enabled extending judicial assistance to all States guided by the rule of law.
2. The most important innovations relate to the fight against organised crime: its finances are considered to be its Achilles heel, hence the new Article 305 bis of the Penal Code on money laundering, applicable as from 1 August 1990. This means that any attempt to prevent the identification or confiscation of assets deemed to be criminal is severely punished.
   
   Article 305 ter on failure to exercise vigilance in connection with financial dealings affects every professional in the financial sector, whether banker or not, who accepts or transfers assets without checking the identity of the ultimate beneficiary. Negligently accepting securities is not, however, a criminal offence.
   
   In order to reinforce the effectiveness of this provision, as of 1 August 1994 (Article 305 ter, new paragraph 2), the law recognises the right to inform the Swiss authorities of information giving rise to a suspicion that assets may be derived from a crime. Accordingly, a banker no longer risks criminal liability for violating his obligation to maintain banking secrecy. It may be anticipated, however, that a new law on money laundering in the financial sector, which may be enacted in 1998, will replace the right with an obligation to inform the authorities, as is the case in the European Union (cf. Chapter 13).
3. At the same time as the law governing stock exchanges, a new article 161 bis of the Penal Code also took effect in February 1997 on the manipulation of stock prices. It sanctions anyone who disseminates misleading information or effects purchases and sales as part of illicit dealings designed significantly to influence the prices of securities being traded on the stock exchange and garner illicit profit.

It should be noted that there are other new articles of the Penal Code not directly related to the issue at hand, which are aimed chiefly at combating international crime (seizure of assets derived from a crime, penalizing membership in a criminal organization, for instance).

• Banking Secrecy Has Never Been Absolute
• The Identity of the Client is Always Known to the Bank
• Origin and Raison d'etre of Banking Secrecy
• Domestic Law: Procedure
• Preserving Documents
• Marriage
• Protection of Personal Data
• Tax Authorities
• Foreign Banks
• Funds Derived From Drug-Trafficking
• The Exercise of Due Diligence
• The Fight against Money Laundering in the Financial Sector
• Conclusion

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