Financial Crime World

Swiss Banks Face Tightened Compliance Requirements Amid Global Regulatory Push

Switzerland’s financial sector is renowned for its stringent banking regulations, which have been significantly tightened in response to the 2007-2008 global financial crisis. The country’s attractiveness as a hub for financial services relies heavily on its robust regulatory framework, designed to safeguard the stability of the financial system and protect creditors.

Primary Objective: Stability and Creditors’ Protection

The primary objective of banking regulation in Switzerland is to ensure the stability of the financial system and protect creditors. This is achieved through various measures, including:

  • Capital requirements for banks
  • Depositor protection
  • Preventive regulatory interventions to limit risks

Regulatory Framework

The Swiss Financial Market Supervisory Authority (FINMA) plays a central role in implementing banking regulations, working closely with the Swiss National Bank (SNB) to monitor individual institutions and ensure compliance. FINMA commissions audit firms to conduct regulatory audits of banks as part of its dual supervisory system, while the SNB has powers of macroprudential regulation to address systemic risks.

Recent Reforms

In recent years, Switzerland has implemented various reforms aimed at strengthening banking regulations, including:

  • The “too big to fail” regime for systemically important financial institutions
  • Basel III standards on capital adequacy and liquidity

The Swiss Bankers Association (SBA) is closely involved in this process, working to ensure that regulatory requirements are credible, proportionate, and take into account the specific circumstances of different institutions.

Global Developments and Advocacy

The SBA is committed to monitoring global developments and advocating for a competitive and effective regulatory framework that supports the growth of Switzerland’s financial centre. The association is currently engaged in discussions on implementing the remaining elements of the Basel III reform package, known as “Basel III final.”

Proportionate Regulation

In its efforts to shape banking regulations, the SBA focuses on ensuring that reforms are proportionate, take into account economic effects, and align with international standards. The association believes that effective regulation can help promote stability, confidence, and growth in the financial sector.

For more information on Switzerland’s banking regulations, readers are referred to the websites of:

  • Basel Committee on Banking Supervision
  • Swiss National Bank
  • FINMA