Switzerland – Global Investigations Review




04 January 2023
In the past few years, Swiss corporations and banks have been confronted with several multi-jurisdictional investigations relating to corruption, fraud, money laundering and tax evasion that have attracted considerable media attention.
Notable continuing multi-jurisdictional investigations include the one launched by the Swiss Financial Market Supervisory Authority (FINMA) and the Office of the Attorney General (OAG) in connection with the global money-laundering scandal around the Malaysian sovereign wealth fund 1MDB and the investigations around the FIFA corruption scandal. In addition, one of Switzerland’s major banks conducted investigations into events surrounding the collapse of Archegos Capital Management and Greensill Capital. In both cases, FINMA opened investigations against the bank.
In connection with Brazil’s biggest corruption case – Odebrecht/Petrobras (Operation Car Wash) – the Swiss prosecutors and FINMA have sent disclosure orders to more than 40 Swiss banks and seized assets valued at more than US$1 billion. By the end of 2018, the Swiss authorities were able to transfer more than 300 million Swiss francs to the Brazilian authorities. In 2018, the OAG initiated criminal proceedings against two Swiss banks.
A notable case at the national level is the investigation in connection into possible irregularities regarding certain private and business dealings of the former chief executive officer of Raiffeisen Bank.
During the coronavirus pandemic, Swiss banks paid around 138,000 bridging loans to Swiss corporations in the amount of 16.9 billion Swiss francs. Currently, there are several hundred criminal investigations under way in connection with loans that are presumed to have been obtained based on fraud and document forgery.
Corporate criminal liability in Switzerland can arise in two situations:
The penalty in either case is a fine of up to 5 million Swiss francs.
Corporations may also be fined in administrative criminal proceedings instead of the responsible individual if a penalty of no more than 5,000 Swiss francs will be imposed (50,000 Swiss francs if the matter concerns a violation of financial market laws) and the investigations would be disproportionate compared to the penalty.
There are no specific law enforcement authorities regulating corporations. Accordingly, there are no specific policies or protocols relating to the prosecution of corporations.
At cantonal level, criminal laws are enforced by the regional and cantonal prosecutors with the assistance of the police. Some cantons have specialist prosecutors’ offices to deal with business crimes.
At federal level, the OAG is responsible for prosecuting offences that are subject to federal jurisdiction (e.g., espionage, certain cases of corruption, inter­national organised crime and certain white-collar crimes). The Federal Department of Finance (FDF) is generally responsible for prosecuting offences against financial market laws (e.g., violation of duty to file a suspicious activity report or violation of disclosure rules).
In addition, government agencies enforce administrative laws and regulations. Important regulatory authorities at the national level are FINMA, which is responsible for monitoring financial institutions and enforcing the financial market legislation, and the Competition Commission (COMCO), which is responsible for monitoring companies for signs of anticompetitive conduct, combating harmful cartels and enforcing merger control legislation.
The police, the prosecutors and the FDF are required to open an investigation once they become aware of a potential criminal offence.
FINMA will initiate an investigation if it has reason to believe that financial market laws and regulations have been violated. However, it has some discretion in deciding whether to open formal enforcement proceedings. For example, it may refrain from opening formal enforcement proceedings if a supervised entity fully co-operates and instantly implements all necessary remedial measures to ensure compliance with financial market legislation.
COMCO has adopted guidelines to establish the circumstances under which it will investigate antitrust violations. It usually opens an investigation when an alleged violation is serious or has a significant effect on the market, or when the case raises a legal question that warrants judicial clarification. COMCO usually declines to investigate complaints when the issue could be better solved through private litigation. It can also decline to investigate a complaint when the target business has already changed its policy, or when the target business agrees to adapt its market behaviour or contracts.
In general, any orders from authorities can be challenged before the competent authorities and courts.
In criminal proceedings (including administrative criminal proceedings), records and objects must be sealed if the owner claims that they may not be searched or seized (e.g., owing to the attorney–client privilege). The authorities then have the possibility to file a request for the removal of the seal before the competent courts.
Confessions and co-operation during the investigations in administrative criminal proceedings and in criminal proceedings may lead to a reduction in the sentence. However, there are currently no specific immunity or leniency rules in Swiss criminal laws for co-operation. Therefore, an individual must carefully assess the potential benefits and disadvantages and decide in each case whether he or she wants to co-operate with the authorities.
In enforcement proceedings, supervised entities and individuals are in general required to provide all information and documents that FINMA requests to fulfil its supervisory tasks. In this context, co-operation is not a mitigating factor but a statutory obligation. However, a supervised entity or an individual may be more able to negotiate an alternative resolution and to avoid formal enforcement proceedings if it agrees to co-operate with FINMA and take remedial measures.
COMCO has adopted a leniency policy that closely mirrors the model of the European Commission’s programme. Companies may be granted complete or partial immunity from sanctions if they self-report, hand over all available evidence and fully co-operate with COMCO. However, only the company that first reports a cartel may benefit from full immunity. Companies reporting subsequently may receive a reduction of their fine if they provide significant additional evidence.
In tax law, voluntary disclosure may lead to a mitigation or waiver of punishment if certain requirements are met.
In recent years, the focus of the Swiss law enforcement authorities has been on corruption, fraud and money laundering cases. The coronavirus pandemic accelerated the continuing drive towards digital transformation and digitalisation and, consequently, there has been an increase in reported cyberattacks and a rise in criminal proceedings in connection with cybercrime.
There is no universal legal requirement under Swiss law to have an effective compliance programme. However, failure to have an effective compliance programme may lead to corporate criminal liability (i.e., a fine of up to 5 million Swiss francs).
For some industry sectors (notably banking and insurance), there are rules requiring effective compliance processes and control functions. The requirements are listed in two circulars regarding corporate governance published by FINMA.
The State Secretariat for Economic Affairs (SECO) has published best practices for an Internal Control Programme for Export Controls (ICP) and a fact sheet for the ICP, as well as a guide to companies operating outside Switzerland on how to fight and prevent corruption. The latter contains high-level guidance on what an anti-corruption code of conduct should contain. It also refers to additional literature and guidance issued by, among others, Transparency International or the International Chamber of Commerce.
Currently, there is no specific piece of legislation regarding cybersecurity. Instead, cyber­security is scattered across a variety of Swiss laws and regulations.
Pursuant to the Federal Data Protection Act, personal data must be protected against unauthorised processing through adequate technical and organisational measures. In general, any violations of this principle must be enforced by bringing an action before the civil courts. The Federal Data Protection and Information Commissioner currently has no enforcement powers.
Based on the Financial Market Infrastructure Act, financial market infrastructures are required to operate information technology systems that ensure the availability, confidentiality and integrity of data relating to participants and their transactions. Violations of these requirements might lead to investigations or, in serious cases, to formal enforcement proceedings by the Swiss Financial Market Supervisory Authority (FINMA). Data breaches concerning data covered by Swiss bank secrecy may result in imprisonment for up to three years or a monetary penalty of up to 540,000 Swiss francs. In the wake of the pandemic’s increased dependency on information and communications technology, rendering financial institutions increasingly vulnerable to cyberattacks, supervised institutions were required to report any major cyberattacks on their critical functions to FINMA. Since 2020, a total of 95 cyberattacks have been reported, most of which have affected banks, followed by insurance companies and asset managers.
Currently, there is no general statutory duty to report data breaches. Depending on the circumstances, however, it might be advisable to notify the data subjects affected by a breach based on the general data processing rules. In addition, there are some sector-specific reporting obligations, including in the financial services, telecommunications, aviation, railway and nuclear sectors.
It is also possible (not an obligation) to inform the Swiss Reporting and Analysis Centre for Information Assurance (known as MELANI) about cyber incidents.
There are several provisions in the Swiss Criminal Code that are specific to cybercrime, including unauthorised obtaining of data or unauthorised access to a data processing system. Depending on the circumstances, other criminal provisions may be applicable also, such as fraud, forgery, extortion, coercion and money laundering.
Switzerland is a member of the Budapest Convention on Cybercrime. The main objective of the Convention is to pursue a common criminal policy aimed at protecting society against cybercrime, especially by adopting appropriate legislation and fostering international co-operation.
Generally, the Swiss authorities have jurisdiction over offences committed in Switzerland. An offence is deemed to have been committed in Switzerland if the accused person acted in Switzerland or the offence had effects in Switzerland.
In specific cases, Swiss courts also have jurisdiction over offences committed abroad, including:
If the offence was committed abroad, the main evidence often needs to be obtained through international mutual legal assistance, which might be a lengthy process depending on the foreign authorities involved. Swiss authorities are thus usually selective in the prosecution of such offences. Instead, they try to prosecute foreign offences indirectly by targeting the accused persons for related offences committed in Switzerland (in particular, money laundering).
The typical issue in cross-border investigations is the transfer of personal data from Switzerland to foreign courts, regulators or enforcement authorities. Several legal provisions restrict the disclosure of personal data to foreign authorities, inter alia, the prohibition of unlawful activities on behalf of a foreign state (Swiss Criminal Code, Article 271), Swiss banking secrecy (Federal Banking Act, Article 47), Swiss data protection and labour laws. Additionally, contractual secrecy obligations or confidentiality agreements may prevent the disclosure of data.
Article 271 of the Criminal Code prohibits and sanctions activities on behalf of a foreign state on Swiss territory unless the competent administrative body has granted an authorisation. In general, Switzerland-based corporations and individuals are thus required to obtain authorisation if they intend to disclose personal data to foreign authorities.
Pursuant to Article 47 of the Federal Banking Act, it is an offence to disclose confidential information about current or former clients of a Swiss bank. A breach of Swiss banking secrecy may not only trigger criminal sanctions but also administrative measures or proceedings and civil liability.
The Federal Data Protection Act requires, inter alia, that personal data only be processed in compliance with specific processing rules (e.g., rules of lawfulness, good faith, proportionality and transparency). In addition, Article 6 of the Act provides that personal data may not be disclosed to recipients outside Switzerland if this seriously endangers the privacy of the data subject. Such a risk is presumed a matter of statutory law if the country of destination is lacking adequate data protection regulation. The Federal Data Protection and Information Commissioner maintains a list of countries that are deemed to have adequate data protection.
When foreign authorities use the available channels of mutual administrative or legal assistance to obtain documents and information, the aforementioned provisions do not apply.
Switzerland applies the ne bis in idem doctrine, which is essentially the equivalent of the double jeopardy concept in common law jurisdictions. Based on this doctrine, no person who has been convicted or acquitted in Switzerland in a final legally binding judgment may be prosecuted again for the same offence. This also applies to corporations. Owing to the territoriality principle, a foreign prosecution or conviction has, in general, no effect on the jurisdiction of Swiss criminal authorities regarding offences committed in Switzerland. Under certain conditions, however, the Swiss criminal authorities have to observe a foreign verdict of acquittal or reduce a sentence if it has already been partly served abroad.
If an investigation pursues the same subject matter, multiple government authorities may simultaneously investigate the same corporation. If appropriate, they usually coordinate their actions and may consult each other to ensure that their investigations do not interfere with each other or duplicate the same enquiries. The ne bis in idem doctrine prohibits multiple Swiss authorities from penalising companies for the same conduct. However, in general, the doctrine has no effect on civil or regulatory proceedings. Therefore, regulatory authorities may order additional measures against a corporation even if that corporation has already been convicted or acquitted in criminal proceedings.
Global settlements are not frequent in Switzerland. However, the Swiss authorities do co-operate with foreign authorities based on applicable laws, in particular in connection with multi-jurisdictional investigations.
In general, Swiss authorities conduct their investigations independently. However, investigations or decisions of foreign authorities may cause the Swiss authorities to initiate an investigation.
Switzerland’s sanctions programme authorises the Federal Council to impose non-military measures to implement sanctions that have been imposed by the United Nations, the Organisation for Economic Co-operation and Development or by Switzerland’s most significant trading partners (e.g., the European Union) for the enforcement of international law, in particular of human rights.
Possible sanctions are direct or indirect restrictions on transactions involving goods and services, payment and capital transfers; the movement of persons; scientific, technological and cultural exchange; prohibitions; licensing and reporting obligations; and other restrictions of rights.
On 28 February 2022, the Federal Council announced the adoption of the European Union’s sanctions against Russia. Sanctions under the Ordinance on Measures connected with the Situation in Ukraine include, among others, travel sanctions, a ban on the import, export, sale, delivery, transit and transportation of certain goods, financial measures such as the freezing of assets and economic resources, and reporting obligations concerning blocked assets.
The State Secretariat for Economic Affairs (SECO) is the main authority with responsibility for monitoring and implementing sanctions. A breach of sanctions may result in imprisonment for up to five years, which may be combined with a fine of up to 1 million Swiss francs.
SECO does not publish information about its sanctions enforcement activity. However, the recently adopted financial sanctions regarding the situation in Ukraine prohibit, among other things, the direct or indirect provision of any economic resources to persons or institutions on the sanctions list. We expect an increase in sanctions enforcement activity regarding sanctions imposed in response to the situation in Ukraine.
The Swiss authorities co-operate with their foreign counterparts provided that co-operation is necessary for the implementation of the imposed sanctions regime, the foreign authorities are bound by official secrecy or a corresponding duty of secrecy, and they guarantee the prevention of industrial espionage within the scope of their activities.
Switzerland does not have restrictions in place that prohibit adherence to other jurisdictions’ sanctions or embargoes. However, applicable blocking statutes, secrecy and data protection regulations may restrict compliance with foreign reporting obligations relating to sanctions imposed by other countries or supranational organisations.
Not applicable.
There are various ways in which allegations of misconduct at a company come to light, including from whistleblowers, anti-money laundering procedures, internal and external audit, among others.
In general, the Swiss authorities initiate their investigations based on their own observations, criminal or other complaints filed by victims or third parties, reports by whistleblowers, media reports and reports from other authorities, including foreign authorities. The criminal authorities and the Swiss Financial Market Supervisory Authority are required to report all offences they become aware of in their official capacity. Investigations are also often triggered by suspicious activity and transaction reports filed with the Money Laundering Reporting Office of Switzerland.
The basis of the data protection regime in Switzerland is the Federal Data Protection Act (FDPA), which is applicable when personal data is processed in Switzerland by a federal authority or a private person (individual or entity). The FDPA is currently under revision to align it with the revised data protection regime of the European Union. The revised FDPA will enter into force on 1 September 2023.
Personal data is defined as all information relating to an identified or identifiable person (individual or entity). Under the revised FDPA, data relating to entities will no longer fall within the scope of personal data and the FDPA.
The FDPA requires, inter alia, that personal data only be processed lawfully, in good faith, in a proportionate manner and transparently. Any data processing that does not comply with these processing rules constitutes a breach of the data subject’s personal rights. Such breaches are unlawful unless they are justified by the consent of the data subject, by an overriding private or public interest, or by a statutory provision of Swiss law. These core principles will not change under the revised FDPA. However, new or broader duties will be introduced (e.g., documentation, information and notification duties).
In addition, there are a number of additional statutory provisions that regulate or prohibit the process or disclosure of data (e.g., Swiss bank secrecy, professional secrecy and employment law).
The Federal Data Protection and Information Commissioner (FDPIC) is the relevant authority if federal authorities, individuals or entities process personal data in Switzerland. At the moment, the FDPIC has only limited powers; specifically, it has no enforcement powers and cannot impose any fines or sanctions. It may issue recommendations that a specific method of data processing be amended or abandoned. If the party concerned does not follow the recommendation or rejects it, the FDPIC may file an action with the Federal Administrative Court. The Court’s decision may be challenged before the Federal Supreme Court.
If data protection regulations are violated, the FDPIC may order, under the revised FDPA, that the processing be adjusted, suspended or terminated in full or in part and that the personal data be fully or partially deleted or destroyed. In addition, the FDPIC may defer or prohibit the disclosure of personal data abroad. However, the FDPIC is still not able to impose fines or sanctions. If an individual or entity wilfully fails to comply with its information, registration or co-operation obligations under the FDPA, it may be fined up to 10,000 Swiss francs.
Under the revised FDPA, individuals who do not comply with the required duties may be fined up to 250,000 Swiss francs. Corporations may also be fined instead of the responsible individual if a penalty of no more than 50,000 Swiss francs will be imposed and the efforts to identify the responsible individual would be disproportionate compared to the fine.
Internal investigations must be set up in compliance with data protection laws. In practice, the most important data protection issue in connection with internal investigations is the provision that personal data may not be disclosed to recipients outside Switzerland if this seriously endangers the privacy of the data subject. Therefore, personal data may only be transferred to a country with inadequate data protection regulation if, inter alia, it is justified by a statutory provision of Swiss law, the consent of the data subject, or an overriding public interest (an overriding private interest does not suffice). However, Swiss courts only exceptionally acknowledge the existence of an overriding public interest. Under the revised FDPA, the Swiss Federal Council will publish a list of countries with adequate data protection regimes.
Based on data protection and labour laws, employees must be informed about the method, scope, period and purpose of any visual, audio or electronic monitoring. Consequently, any monitoring that is clandestine, or has not been announced in advance, is prohibited and cannot be justified by an overriding interest of the employer.
In addition, there are several criminal provisions that sanction the breach of privacy.
In connection with investigations, dawn raids and search warrants are common tools of the authorities.
In general, houses, dwellings and other rooms not publicly accessible may be searched only with the consent of the proprietor unless a search warrant has been issued. Searches not covered by a search warrant are in general unlawful and evidence obtained in connection with an illegal search is inadmissible unless it is essential to secure a conviction for a serious offence. Other evidence gained from that tainted evidence is in general also not admissible.
Search warrants can be challenged before the competent authorities or courts based on both the legitimacy and the scope of the search.
A request may be made to seal privileged material but this must be done without delay. The authorities must not search the sealed material but they may file a request before the competent courts for the removal of the seal. The court will then review whether the claim of privilege is valid. The court’s decision may be challenged before the Federal Supreme Court.
Every individual from the age of 15 and with sufficient mental capacity is compelled to testify before the criminal prosecution authorities and criminal courts unless they have the right to refuse testimony because of a personal relationship (e.g., marriage or kinship), for personal protection (self-incrimination) or to protect closely related persons (e.g., spouses, parents, children or siblings), or owing to official secrecy or professional confidentiality (which applies to, for example, lawyers, members of the clergy and physicians).
There is no specific whistleblowing framework in existence in Switzerland; in particular, there is no specific protection for whistleblowers. A proposal of the Federal Council to improve the protection for whistleblowers was rejected by the National Council in 2019. Switzerland does not operate formal financial incentive schemes for whistleblowers. Nevertheless, in recent years, many corporations have introduced whistleblower frameworks that allow employees and third parties to file complaints anonymously.
Based on Swiss labour law, employees are bound by a duty of loyalty towards their employers and must not, generally, report potential misconduct publicly or to the authorities. Against this background, Swiss courts have developed a formula pursuant to which dismissal in connection with whistleblowing is not regarded as abusive if the employee did not first report the offence or misconduct internally but if the management did not take appropriate remedial measures. Under Swiss labour law, even an abusive termination is valid and entitles the dismissed employee only to financial compensation of up to six months’ salary.
Under Swiss labour law, all employees have a general duty of loyalty towards their employers and an obligation to account for all their activities and work-product during their period of employment. Based on these provisions, it is recognised that employees have to assist with internal investigations conducted by the employer, including providing relevant documents and information, and participating in interviews. In return, employers have the obligation to safeguard the personal rights of their employees. If employees might be subject to criminal prosecution, it is in general advisable to alert them to the right not to incriminate themselves and to allow them not to respond to specific questions. However, there is no uniform opinion or case law regarding this matter. The same applies to the question of whether employees are entitled to have legal representation or a trusted adviser present during interviews.
In general, employees with high-level positions have an increased duty of loyalty towards their employers compared to other employees and thus have increased co-operation obligations in connection with internal investigations.
Under Swiss labour law, an ordinary dismissal is possible at any time without specific grounds, whereas an immediate dismissal requires a material ground. Based on case law, the employer is generally required to investigate the allegations of potential misconduct before dismissing the employee. Otherwise, the dismissal might be considered as abusive and thus entitle the employee to financial compensation.
In practice, corporations tend to suspend employees from work while an investigation regarding their potential misconduct is being carried out.
An unwarranted refusal to co-operate with an employer’s internal investigation constitutes a breach of contractual duties and may entitle the employer to take disciplinary action against the employee who is not co-operating, including, in serious cases, dismissal.
It is common practice in Switzerland to prepare an investigation plan prior to the launch of an internal investigation. The plan should define in particular the subject matter (i.e., the factual and legal topics to be covered) and the scope of the investigation. Additionally, investigation plans often define investigatory steps, time frames, resources and responsibilities as well as status and final reporting.
There is no explicit statutory obligation to conduct an internal investigation. However, several provisions in corporate, labour, regulatory and criminal law may require a corporation to investigate potential misconduct so as to avoid liability and sanctions, or to be able to co-operate with the authorities.
Based on their duty of loyalty, employees are in general obliged to report to their superiors if they become aware of potential misconduct within the company. Management is required to inform the board of directors of any misconduct with potential material effects on the corporation.
Under Swiss criminal law, it is illegal to interfere with the course of justice, in particular to tamper with or destroy evidence. In addition, corporations have statutory obligations to preserve documents for certain periods (in general for 10 years). Therefore, corporations are required to have the appropriate systems and directives in place and to provide all employees with clear instructions to prevent material from being destroyed that is subject to an order from a law enforcement authority.
Under the Swiss money laundering regime, receipt of a subpoena triggers due diligence obligations that may result in filing a suspicious activity report with Switzerland’s Money Laundering Reporting Office. However, this obligation is imposed only on persons and entities (mostly financial intermediaries) that are subject to the Swiss Anti-Money Laundering Act.
There is no general obligation to inform the public about an internal investigation or an enquiry from a law enforcement authority. An exception may exist for publicly listed companies that are subject to ad hoc publicity rules (i.e., the requirement to disclose information that could have a substantial effect on the market price).
In general, internal investigations are welcomed, or at least tolerated, by Swiss enforcement authorities as long as they do not negatively affect their own investigations. Internal investigations are often a practical necessity for corporations to be in a position to respond to requests from criminal or regulatory authorities.
In general, internal investigations conducted by Swiss attorneys are subject to the attorney–client privilege. In two decisions, however, the Federal Supreme Court called into question the generality of that rule. In both cases, the clients were financial institutions and the authorities claimed that the invocation of the attorney–client privilege to protect an investigation report and its annexes would constitute a circumvention of statutory documentation obligations under the anti-money laundering legislation. Both decisions have been heavily criticised in the legal community.
Best practice to uphold the attorney–client privilege in connection with internal investigations includes a clear definition of the scope of the investigation and a clear separation between fact finding and legal analysis and advice. If the client is subject to anti-money laundering duties, potential documentation obligations should either be part of a separate investigation stream and report, or explicitly excluded from the scope of the investigation conducted by external counsel.
With few exceptions, all communications between a client and an attorney and all work-product are subject to the attorney–client privilege, provided that they relate to the attorney’s typical professional activities (i.e., advising and representing in legal matters). The protection applies irrespective of the location of the correspondence and documents, that is to say the material does not need to reside with the attorney to be privileged.
In criminal proceedings, privilege cannot be invoked if the attorney is charged in the same context.
Pre-existing documents and materials created outside the scope of an attorney’s engagement are not subject to the attorney–client privilege.
Both the client and the attorney are deemed holders of the attorney–client privilege. This means that the client can release the attorney from the confidentiality obligation but the attorney may still refuse to disclose privileged information despite the release.
The attorney–client privilege can be invoked by both individual and corporate clients.
The attorney–client privilege currently applies only to external counsel. Consequently, communications between employees of a corporation and in-house counsel are not privileged in Switzerland. In connection with the revision of the Civil Procedure Code, there are plans to introduce the attorney–client privilege for in-house counsel under certain conditions in civil proceedings.
According to Swiss procedural laws, the attorney–client privilege applies, in general, only to Swiss attorneys and lawyers from EU Member States, countries within the European Free Trade Association or the United Kingdom who are authorised to practise in Switzerland, unless the client is a target of a criminal investigation. The Swiss Federal Supreme Court confirmed this interpretation of the law in a decision rendered in 2021.
Swiss authorities cannot require a client or an attorney to waive the attorney–client privilege. If there is a disagreement as to whether specific material is privileged, the competent courts will decide whether the documents may be used by the authorities. If a corporation or individual under investigation seeks leniency but at the same time heavily relies on the attorney–client privilege, this approach might be considered as inconsistent and thus as a lack of co-operation.
As a general rule, information protected by attorney–client privilege may be disclosed to third parties, including Swiss authorities, without waiving privilege. However, the disclosure may lead to factual loss of privilege if the proceedings are public (e.g., court hearings) or the authority is required to share the information with other Swiss or foreign authorities (e.g., mutual administrative or legal assistance). Therefore, it should be decided carefully in each case whether privileged information will be disclosed to Swiss authorities.
In general, the attorney–client privilege waived on a limited basis in another country can generally be maintained in Switzerland. However, the foreign-based recipient of the privileged information may share the information with the Swiss authorities without informing the privilege holder.
The concept of common interest privileges does not exist in Switzerland. Corporations and individuals represented by separate attorneys may share information and work-product with each other without waiving the attorney–client privilege under Swiss law.
The attorney–client privilege also applies to third parties assisting a Swiss attorney (or an attorney authorised to practise in Switzerland) if the third parties have been engaged by the attorney and the assistance relates to the attorney’s typical professional activity (e.g., forensic analysis for advising and representing a client in administrative, civil or criminal proceedings).
There are no specific laws on how to conduct an internal investigation. In general, interviewing witnesses is permitted in Switzerland but interviews may be recorded by a camera or audio device only if all participants agree to a recording being made. Violation of this principle constitutes a criminal offence.
According to case law, Swiss lawyers may perform interviews only if there is a factual need for the interview, the interview is in the interest of the client, the lawyer avoids any influence on the interviewee and the interview does not impair investigations by the authorities. These requirements are usually met when a lawyer conducts merely a fact-finding interview in connection with an internal investigation.
Until 2018, the commonly held view was that work-product created by external counsel in connection with internal investigations, including witness interviews or attorney reports, was subject to the attorney–client privilege. This view has been challenged based on two decisions of the Federal Supreme Court in 2018 and 2019.
At the beginning of an interview, the interviewee should be informed about the background of the investigation, the purpose of the interview, any allegations made against the interviewee, and the intended use of the information provided during the interview (in particular whether the information may be shared with authorities). If external lawyers are present at an interview, it should be emphasised that they represent the interests of the corporation and not those of the interviewee.
The questioning should be fair, objective and based on civility and respect towards the interviewee. If it becomes apparent in the course of the interview that an interviewee may expose himself or herself to criminal prosecution, the interviewee should be informed about the right to refuse to testify and the right to seek legal representation. If the authorities are already investigating the matter, it might be advisable to liaise with them to clarify whether they have any objections to the interview.
In general, the aforementioned best practices apply to both employees and third parties. The main difference, however, is that third parties are not under an obligation to assist with an internal investigation or to participate in an interview.
The Federal Supreme Court has concluded that interview notes or minutes are admissible evidence in criminal proceedings even if no Miranda warnings were given. However, interview notes or minutes need to meet certain criteria (e.g., bearing the signature of the interviewee and confirming the accuracy of the content or statements) to qualify as documentary evidence and not as mere party allegations.
The structure of an internal interview will depend on the investigation and the person to be interviewed. In general, the interview is typically led by two people. If the interview is conducted by external counsel, a member of the human resources or legal and compliance department is often present. At the beginning of an interview, the interviewee should be informed about the background of the investigation, the purpose of the interview, any allegations made against the interviewee, and the intended use of the information provided during the interview. Documents will be presented to the interviewee if it is necessary or helpful for the line of questioning.
Whether or not an interviewee has a right to legal representation has not been established by the courts to date. In practice, whether a legal representative for the employee is present at the interview will depend on the allegations raised.
There is no general statutory obligation to report potential offences or misconduct to the authorities in Switzerland.
In the financial sector, there are two main reporting obligations. First, supervised entities and individuals must inform the Financial Market Supervisory Authority immediately about any incident, including potential offences or misconduct within their activities, that is of material relevance for the supervision. Second, Swiss financial intermediaries and other persons falling within the scope of Anti-Money Laundering Act are required to report cases of suspected money laundering to the Money Laundering Reporting Office of Switzerland, based on applicable Swiss anti-money laundering provisions.
Among the many factors to determine whether to self-report are the likelihood that potential misconduct will become public or otherwise known to the competent authorities and the availability of a leniency regime or co-operation bonus. The decision to self-report should be made from a multinational perspective if the potential misconduct relates to more than one jurisdiction.
Before approaching the authorities, a company should have a sufficient understanding of the relevant facts of the misconduct it plans to report. This often requires a preliminary internal investigation. In practice, it is often advisable to contact the authorities informally through external counsel.
Corporations are required to comply with notices and subpoenas unless they challenge them before the competent agencies or courts. There is no obligation to liaise with the law enforcement authorities before responding to notices or subpoenas. In practice, it is often advisable to enter into a dialogue with the law enforcement authorities to get a better understanding of the background, the scope and the next steps of the investigation. A dialogue can also be helpful to clarify potential misunderstandings or ambiguities. Under certain circumstances, the authorities may be willing to amend their notices or subpoenas (e.g., when it would be practically or technically impossible or far too burdensome to provide the authorities with the information or documents requested).
In criminal law, the initiation of investigations and preliminary proceedings are not subject to challenge before the courts unless the accused person claims that it would constitute a violation of the ne bis in idem doctrine (an equivalent of the double jeopardy concept in common law jurisdictions). In practice, the initiation of administrative or regulatory investigations cannot be challenged either.
Once the investigations or preliminary proceedings are under way, procedural orders, compulsory measures and decisions can usually be challenged before the competent agencies or courts.
Swiss and foreign authorities increasingly tend to coordinate their actions in multi-jurisdictional investigations.
Owing to several Swiss legal provisions, corporations and individuals based in Switzerland are subject to several restrictions when co-operating with foreign authorities, in particular if the requested information and documents include personal data about employees, third parties and clients. Should a foreign authority issue a notice or subpoena, the company must carefully consider whether it can co-operate, can provide only redacted information, needs to obtain an authorisation from the Swiss authorities or should inform the foreign authority that they have to use the channels of mutual administrative or legal assistance.
In general, the Swiss authorities do not seek production of material that is only available outside Switzerland. In such cases, the Swiss authorities will instead use the available channels of mutual administrative or legal assistance to obtain the material.
Switzerland co-operates with foreign authorities based on mutual administrative or legal assistance and police co-operation through Interpol and Europol.
Whether or not assistance is granted depends on whether the applicable requirements are met. In addition, the persons concerned may challenge the decisions of the Swiss authorities to grant assistance before the competent courts.
The sharing of information with Interpol and Europol is in general not subject to challenge before the courts. However, persons may request that information that relates to them is amended or deleted.
Swiss authorities and their staff are bound by official secrecy and may only disclose non-public information they become aware of during the exercise of their official duties, provided the law allows them to do so.
If a Swiss authority issues a notice or subpoena that would violate foreign law, the company may challenge the order before the competent authority or court. However, Swiss authorities will usually use the available channels of mutual administrative or legal assistance.
Switzerland has several secrecy or blocking statutes that restrict co-operation with foreign authorities. Article 271 of the Criminal Code prohibits and sanctions activities on behalf of a foreign state on Swiss territory unless the competent administrative body has granted an authorisation. In general, Switzerland-based corporations and individuals are thus required to obtain an authorisation from the competent authority if they intend to disclose personal data to foreign authorities based on a notice or subpoena from a foreign authority. Typically, authorisations will not be granted if the channels of mutual administrative or legal assistance are available.
In general, there are no legal risks involved if the production is based on an order or subpoena issued by the Swiss authorities.
In respect of voluntary productions, however, corporations and individuals co-operating with Swiss authorities must be careful not to violate applicable data protection, labour and secrecy laws (in particular, business secrecy and bank secrecy). To reduce their exposure to risk, they can either obtain consent from the data subjects and secrecy owners, or redact the protected information.
Swiss authorities and their staff are bound by official secrecy and may only disclose non-public information they become aware of during the exercise of their official duties, provided the law allows them to do so. Once a case is before a court, however, the proceedings and the oral passing of judgments are, in general, open to the public.
In criminal proceedings, a corporation may face a fine of up to 5 million Swiss francs. In addition, the court may order the publication of the judgment and the forfeiture or confiscation of assets.
Depending on the offence committed, directors, officers or employees may be punished with a fine (in general, up to 10,000 Swiss francs), a monetary penalty (in general, up to 540,000 Swiss francs) or imprisonment (in general, up to 20 years).
In enforcement proceedings, the Financial Market Supervisory Authority (FINMA) has a wide set of enforcement tools. Inter alia, FINMA may confiscate profits generated or losses avoided through serious violations of financial market laws and regulations by supervised entities or individuals in senior functions, prohibit individuals from exercising a professional activity, withdraw licences and order the liquidation of financial institutions in the event of serious violations. In addition, individuals and entities that do not comply with a FINMA order may be fined up to 100,000 Swiss francs. Finally, individuals who provide FINMA with false information may face a custodial sentence of up to three years or a monetary penalty.
Some supervisory authorities (e.g., the Competition Commission in antitrust and the Federal Office of Communications in telecommunication matters) may impose fines of up to 10 per cent of the average turnover of the corporation in Switzerland during the previous three years.
Debarment from government contracts is currently not a specific sanction under Swiss law. However, if a settlement with a foreign authority may have a relevant effect on the corporation’s liquidity, stability, business or reputation, it is advisable to liaise with the competent supervisory authority prior to the settlement.
Relevant factors for determining the fines for corporations in connection with any wrongdoing are the seriousness and the number of the offences committed in their commercial activities, the damage caused by the offences, the severity of the organisational inadequacies, the economic ability of the corporation to bear the fine, remedial measures taken (e.g., restructuring measures or reparation payments), the quality of the corporation’s co-operation with the authorities during the investigation and previous misconduct.
For individuals, the criminal authorities have to take a variety of aspects into account, including the culpability (i.e., damage caused, conduct and motives), previous conduct and the personal circumstances of the offender as well as potential mitigation factors (e.g., honourable motives, serious distress, dependency and remorse) and the effect that the sentence will have on the offender’s life.
Overall, we observe a tendency by criminal authorities to impose higher fines and monetary penalties as well as longer custodial sentences for business crimes.
Currently, neither deferred prosecution agreements (DPAs) nor non-prosecution agreements (NPAs) are available in Switzerland, either for corporations or individuals.
No, since neither DPAs nor NPAs are currently available in Switzerland for either corporations or individuals.
According to Swiss case law, journalists are entitled to access settlements with prosecutors unless the access would be contrary to overriding public or private interests. Therefore, corporations should be prepared for media enquiries and coverage once they have reached a settlement. In addition, plaintiffs may use publicly available orders against a corporation to pursue their civil claims because most settlements include an implicit admission of guilt (e.g., payment of reparation or acceptance of the facts).
Swiss criminal law currently does not provide external corporate compliance monitors as an enforcement tool.
However, the Financial Market Supervisory Authority (FINMA) may engage an independent and suitably qualified person as investigating agent, auditing agent, restructuring agent, crisis manager or liquidator. Investigating agents will be engaged in connection with enforcement proceedings and are responsible for investigating the facts in connection with potential misconduct or implementing supervisory measures ordered by FINMA. Auditing agents will conduct special audits of supervised individuals and entities, including with regard to remedial steps. Restructuring agents are mandated by FINMA to draw up restructuring plans. Crisis managers take over the management of the financial intermediary concerned, draw up proposals for dealing with the crisis, and implement them. Liquidators carry out liquidation when an intermediary has no licence or has lost its licence.
In connection with criminal investigations and proceedings against corporations or their (former) employees, individuals or entities claiming damages regularly request participation as private plaintiffs. If they are admitted to participate in the criminal proceedings as private plaintiffs, they may have access to the case file, be present during hearings of parties and witnesses, ask questions of the parties and witnesses, submit requests for evidence, and file appeals against orders and the final judgment.
In administrative proceedings, however, in particular in enforcement proceedings conducted by FINMA, private plaintiffs are not parties to the proceedings and thus have no access to the case file and will not be informed about the outcome of the investigation and proceedings.
Swiss authorities and their staff are bound by official secrecy and may only disclose non-public information they become aware of during the exercise of their official duties, provided the law allows them to do so.
Investigations and pretrial proceedings conducted by the criminal authorities are not public. Therefore, the criminal authorities must treat as confidential any information gathered or received during the investigations and pretrial proceedings.
Once a case is before a court, the proceedings and the oral passing of judgments are, in general, open to the public.
FINMA does not usually inform the public about pending investigations. It only publishes information about specific proceedings when this is necessary to protect market participants, to correct wrong or misleading media reports or to maintain the reputation of the Swiss marketplace. If there is a serious violation of the law, FINMA may publish its final ruling and disclose personal data about individuals and entities.
The Competition Commission (COMCO) is required to issue an official press release when opening a formal investigation, stating the purpose of and parties to the investigation. COMCO may publish its decision but the publications must not reveal any business secrets. Corporations named in the decision receive the decision prior to publication and may ask COMCO to redact further information if this is necessary to protect business secrecy or personal privacy.
Communications strategies vary from company to company and will need to be assessed for each situation separately, taking into account various factors, such as the complexity and gravity of the issue or crisis. In complex or severe cases, it has become common to build a communications task force, including external counsel and communications experts, that provides guidance on the communications strategy.
The communication strategy depends on the specific circumstances. In general, corporations tend not to comment on ongoing proceedings or only give very high-level comments.
In general, there is no mandatory obligation to disclose to the market when a settlement has been reached. However, depending on the circumstances (e.g., the penalty amount or the effect on business), the conclusion of a settlement may lead to a disclosure obligation under the ad hoc publicity rules under which publicly listed companies have to disclose any information in their sphere of activity that could have a substantial effect on the market price.
Since January 2021, a gender representation regime applies to companies that exceed two of the following criteria in two successive years (see Swiss Code of Obligation, Article 734f): a balance sheet of 20 million francs, sales revenue of 40 million francs and 250 full-time positions on average annually. Unless male and female members makes up at least 30 per cent of the board of directors and 20 per cent of the executive board, the companies must indicate (1) the reasons why the genders are not represented as required and (2) the measures being taken to increase the representation of the less represented gender. However, the obligation to report will begin five years after the law comes into force regarding the board of directors (i.e., from January 2026) and 10 years after the law comes into force regarding the executive board (i.e., from January 2031). At the moment, no sanctions are foreseen for violating this obligation.
In addition, two new regimes entered into force on 1 January 2022.
Non-financial reporting obligations on compliance with matters of corporate social responsibility (CSR) (Transparenz über nichtfinanzielle Belange), including, but not limited to, environmental and human rights standards will be included as an amendment to the Swiss Code of Obligations (CO) (the Non-Financial Reporting Obligations). Companies of public interest (i.e., public companies as well as banks, insurance companies and other supervised companies in the financial sector) that, with their affiliates in Switzerland and abroad, have (1) at least 500 full-time employees (on average in a year) and (2) either total assets of more than 20 million Swiss francs or revenues of more than 40 million Swiss francs, must report annually on non-financial matters in a stand-alone report. The report must contain information necessary to understand the group’s business development, performance and position, and the impact of its activity on environmental (including carbon dioxide emission targets), social, employee, human rights and anti-corruption matters. According to a non-exhaustive list, the report has to include a description of:
Certain due diligence obligations and transparency obligations (including special reporting obligations on supply chain tracing with regard to minerals and metals) in connection with conflict minerals and child labour is included in the amendment to the CO (the Due Diligence Obligations) and is further detailed in the Ordinance on Due Diligence Obligations and Transparency in Connection With Conflict Minerals, Conflict Metals and Child Labour (referred to as the Due Diligence Ordinance). Under that regime, Swiss companies that (1) import or process a certain amount (the amount imported or processed by group companies to be added) of minerals or metals containing tin (5,000kg per year), tantalum (100,000kg per year), tungsten (250,000kg per year) or gold (in pure form, 100kg per year; as ores, 4 million kg per year) – even as secondary products – from conflict or high-risk areas (excluding recycled metals) or (2) offer products or services where there are reasonable grounds to suspect that child labour was involved, will be subject to certain due diligence obligations with respect to their supply chain (except small and medium-sized enterprises). The obligation under point (2) does not apply if products or services originate from low-risk countries, which will be presumed if the country of origin is one classified as ‘Basic’ in the Children’s Rights in the Workplace Index.
In March 2022, the Swiss government published a draft ordinance that specifies climate-related reporting obligations. The ordinance was expected to come into force on 1 January 2023. The reporting obligations will apply to large Swiss companies and are part of general ESG reporting. A general ESG report will have to be issued for the first time in 2024 with respect to financial year 2023.
We expect increased activity in line with global trends, with some high-profile matters having been filed in Switzerland recently. The Financial Market Supervisory Authority (FINMA) has made ESG-related topics one of its strategic goals for 2021–2024.
The biggest anticipated change will be brought about by the changes made to the Swiss Code of Obligations regarding non-financial reporting and due diligence obligations.
[1] Flavio Romerio, Claudio Bazzani and Katrin Ivell are partners and Reto Ferrari-Visca is an associate at Homburger.
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