This report provides information on activities of Switzerland in the areas of financial market regulation, engagement in international financial bodies and international tax policy. Below, ten key points on the progress made by Switzerland during 2016 and the challenges that the Swiss authorities face in 2017.
1 – Federal Council’s objectives
Pursuing a strong and dynamic forward-looking policy with respect to financial markets, boosting the competiveness of the Swiss financial centre, and ensuring quality, stability and integrity of the financial markets.
2 – Market access
Access to non-Swiss financial markets to be maintained and improved; alignment with internationally recognised standards as a key component of the Federal Council’s policy; bilateral agreements to be sought with partner countries, including with EU for recognition of the equivalence of the Swiss financial market regulation in areas such as derivatives regulations, financial infrastructures, cross-border activities, and extension of the EU passport system for the alternatives investment funds.
3 – Fintech, new technologies
Intention of the Federal Council to reduce obstacles for Fintech firms and to take into account new technologies, while ensuring legal security; recent launch of a consultation on amendments to the Banking legislation for facilitating market entry for Fintech firms and enhancing the competitiveness of the Swiss financial centre; treatment of assets based on blockchain technology and of cryptocurrencies to be reviewed by the end of 2017.
4 – Too-big-to-fail
Entering into force of the amendments to the Swiss too-big-to-fail regulation, making Switzerland one of the countries with the highest capital requirements in the world for global systemically important banks.
5 – Ongoing legislative projects
Current independent assessment of certain financial regulations in force; improvement of the depositor protection, revision of the insurance legislations, implementation of Basel III; active participation to the development and implementation of provisions applicable to the commodities sector; draft financial services and financial institutions legislations to be debated by the Swiss Parliament; extension of the transitional periods for financial market infrastructures to fulfil various new duties by one year to 1 January 2018.
6 – Anti-money laundering and terrorist financing
Overall good marks from the Financial Action Task Force (FATF) and above-average result compared to those countries already reviewed by the FAFT; acknowledgment by the FATF of the quality of the Swiss system for combating money laundering and terrorist financing; however, Swiss legislation and its implementation still to be improved.
7 – Tax transparency
Signature of joint declarations on the introduction of the automatic exchange of information (AEOI) in tax matters on a reciprocal basis with numerous countries in 2016, adoption of required legal provisions for application of the AEOI as from 1 January 2017, ratification of the administrative assistance convention, which entered into force on 1 January 2017, acceptance to comply with the Base Erosion and Profit Shifting (BEPS) rules; overall rating of “largely compliant” from the Global Forum on Transparency and Exchange of Information for Tax Purposes.
8 – U.S. Program
Ongoing process to regularise Swiss banks activities in the U.S. (80 banks in “category 2” which may have breached U.S. law, issuance of five Non-Target Letter by the U.S. Department of Justice (DoJ) to “category 3” Swiss banks, ongoing negotiations between “category 1” Swiss banks and the DoJ, final settlement between Julius Bär (category 1) and the DoJ).
9 -Discussions with key partners
Bilateral discussions with important partners regarding financial matters during the G20 to which Switzerland was invited by China; close follow-up of the Brexit evolution and continuous contacts with the UK authorities in order to discuss issues of mutual interest.
10 – Monetary policy
General support of the International Monetary Fund on the Swiss National Bank’s policy approach with, however, some adjustments being recommended; potential risks continue to stem from international financial markets and developments within Switzerland.
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About the Authors
Fabien Aepli
Fabien Aepli is cofounder of Mangeat Attorneys at Law LLC and specialises in advising financial institutions (including banks, independent asset managers and distributors of collective investment schemes) on asset management matters and contracts, organisational rules, directives or processes, including when dealing with regulators (e.g. FINMA).
Nurith Cohen
Nurith regularly assists both Swiss and foreign companies, financial institutions as well as individuals in reviewing or drafting commercial contracts and corporate documents. She assists clients in setting up or reorganising companies.