Financial Crime World

Switzerland Fails to Implement Whistleblower Protection, EU Companies Take Notice

As the implementation deadline of December 17, 2023 approaches, companies with subsidiaries in the European Union (EU) are being reminded to establish internal reporting channels for whistleblowers. The EU Whistleblowing Directive, which came into force in December 2019, requires EU member states to provide special protection for whistleblowers who report suspected misconduct or wrongdoing.

Background

The EU Whistleblowing Directive aims to ensure that whistleblowers are protected from retaliation and harassment when reporting internal or external irregularities. The directive also requires companies to establish internal reporting channels, which must meet minimum content requirements.

Impact on Swiss Companies

Switzerland does not have a similar legal framework in place, but companies with subsidiaries in the EU are required to implement internal reporting channels under certain conditions. According to Richard Thomas, Partner at PwC Switzerland’s Risk Consulting TIS (Trade, Industry, Services) & Internal Audit:

  • EU subsidiaries of Swiss companies must set up an internal reporting channel by December 17, 2023, if they have 50 or more employees.
  • Those with 250 or more employees had to comply with this obligation by December 17, 2021.

Importance of Whistleblowing Management System

Philipp Rosenauer, Partner at PwC Switzerland’s Legal, notes that Swiss companies may not be affected equally by the EU Directive, but it is still essential for them to develop and implement a trustworthy whistleblowing management system. “An adequate whistleblowing management system:

  • Reduces the risk of non-compliance and legal breaches
  • Promotes an ethical culture
  • Demonstrates good corporate governance
  • Strengthens trust among key stakeholders”

What Swiss Companies Need to Do

As Switzerland has not implemented a similar framework, it is crucial for Swiss companies with subsidiaries in the EU to take action and ensure compliance with the EU Directive. This includes:

  • Setting up an appropriate infrastructure
  • Implementing a clear whistleblowing policy
  • Conducting adequate training
  • Maintaining regular reporting cycles

Consequences of Non-Compliance

Companies are advised to consult local law and take immediate steps to establish internal reporting channels that meet the minimum standards of the EU Directive. Failure to comply may result in severe consequences, including:

  • Heavy fines
  • Reputational damage

Support from PwC Switzerland

PwC Switzerland offers support to companies seeking guidance on implementing a whistleblowing management system that meets the requirements of the EU Whistleblowing Directive. With their expertise and experience, companies can ensure compliance with the directive and maintain a trustworthy whistleblowing management system.