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Administrative assistance under narrow conditions

Within the framework of effective cross-border supervision, the Swiss Federal Banking Commission (FBC) as Swiss supervisory authority provides and transmits confidential information upon request of a foreign supervisory authority under certain conditions. According to article 38 of the Swiss Stock Exchange Act of March 24 1995 as amended these are:

  • the foreign supervisory authority (being bound by the professional secrecy) must use the information exclusively for purposes of supervision;
  • the foreign supervisory authority may not forward the information to any other authority without the prior consent of FBC or by virtue of a general clause in an international treaty;
  • any transmission of such confidential information to criminal authorities is not permitted if judicial assistance in criminal matters would be excluded; and
  • the FBC must make a decision in consultation with the competent Federal Office for Police Matters (FOP).

It is established practice that the formal consent of FBC is made by an order which is subject to appeal. In a recent decision, the Swiss Federal Supreme Court confirmed these principles and gave further guidelines on how FBC has to proceed. Upon request of the French Supervisory Authority for Stock Exchange, FBC transmitted documents on a stock exchange transaction which was effected through a Swiss bank. FBC permitted the French authorities to forward the documents to the criminal authority.

The Court found that such consent did not comply with the legal requirements, since the competent FOP only formally consented to such forwarding of information. The Court stressed that FOP must not only consent to the forwarding of confidential information to the stock exchange supervisory authority, but must expressly state that the preconditions for judicial assistance in criminal matters are met. In the absence of such a statement, administrative assistance in the present case could only have been granted on condition that the documents would not be forwarded to a criminal authority. The Court thereby reiterated that the FBC must proceed in administrative assistance in a completely formal way.

With this approach, the Court has leaned towards a restrictive interpretation of the rules laid down in article 38 of the Swiss Stock Exchange Act. The decision aims to avoid any potential abuse of confidential information obtained through administrative assistance for criminal or tax investigations.

(Source: Decision of the Swiss Federal Supreme Court 2a.496/1999 of February 24 2000).

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