Belser Altorfer & Partner
As of November 1 1999 the Circular of the Federal Banking Commission (FBC) on the outsourcing of bank transactions entered into force. The Circular, by specifying which activities may be outsourced in what manner and to whom, is intended to define the core tasks of a bank or securities dealer and also states which core banking or securities dealer activities may not be outsourced to or insourced from an external service provider. These core activities consist of: the ultimate direction of the business, supervision and controlling by the board of directors, and the decision on entering into or terminating a client relationship as well as what the Circular broadly defines as "the core management tasks of the officers". All other activities may be outsourced without the prior permission of the FBC.
Pursuant to the Circular, the outsourcing bank or securities dealer (and its auditors) must continue to have free access to the outsourced data and the bank or securities dealer remains liable to the FBC as if it were performing the activities itself. By providing services to a bank, the provider is under the same obligation of secrecy with regard to client data - and, in case of violation, faces the same criminal sanctions - as the bank itself. Banks and securities dealers have to inform their clients before they transfer client data to a service provider who is not under FBC supervision. Not all of the requirements of the Circular apply in the case of outsourcing from branch to headquarters and vice versa as well as for providing services within a group of companies. For outsourcing solutions already in use before November 1, 1999, a two-year grace period for compliance with the new provisions has been set.