In October 2003 Switzerland amended the Federal Penal Code
(FPC) and enacted provisions exposing corporations to penal
prosecution. With this step Switzerland took up the pace set by
Anglo-Saxon and some European countries years ago.
A new article in the FPC, article 100 quarter (i), outlines
a secondary penal responsibility of corporations, in those
cases when a crime is committed within the corporation's scope
of business, but the crime cannot be tied to an employee
because of the corporation's lack of sufficient internal
organization. In a numerus clausus of criminal
activity such as organized crime, money laundering, bribery of
authorities, or the financing of terrorism, the corporation
also becomes primarily and cumulatively subject to penal
prosecution if it fails to take the necessary and reasonable
organizational measures to prevent the crime. This is outlined
in article 100 quarter (ii).
In both cases the corporation's culpability is tied to
organizational deficiencies. In cases of secondary culpability
the deficiency is such that the perpetrator cannot be
identified. In cases of primary culpability, although the crime
is attributable to an individual, the corporation is at fault
for failing to take appropriate and reasonable steps to prevent
Over the past decade, the Swiss government and the
monitoring bodies of the financial markets put a tight
framework of legislation in place aimed at preventing money
laundering and the abuse of the financial markets for
organizational crime or bribery. There is widespread consensus
that financial institutions which comply fully with the rules
of the Federal Banking Commission and of the self-regulatory
bodies of professional organizations, as well as the present
legislation, run little risk of violating article 100 quarter
Were they to violate the article, they could face fines of
up to CHF 5 million ($3.8 million).
But practitioners will be more concerned about what is meant
by "the necessary and reasonable organizational measures to
prevent wrongdoings" stated in article 100 quinquies (ii).
Although until today no investigation or court decision
dealing with article 100 quinquies in the FPC has become
public, it is expected that the new legislation will be of high
practical importance. In particular, persons who suspect that
they have suffered financial losses due to wrongdoings within a
company have an interest in beginning a criminal investigation
into the corporation. This would allow them to shortcut or even
avoid civil procedures.
Corporations involved in a criminal investigation will be
forced to make provisions in their financial statements for the
commencement of the investigation. Depending on the importance
of the matter and the exposure involved, and whether the
company is listed or not, there may even be grounds for ad hoc
The financial consequences for a corporation subjected to a
criminal investigation should not be underestimated.
Corporations doing business in Switzerland have a further
reason to ensure that they are in full compliance with local
laws and regulations.