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Banking Industry Compliance Updates: Switzerland Takes a Leap Forward

Switzerland has embarked on a comprehensive overhaul of its financial market legislation, aimed at enhancing investor protection and promoting legal certainty. The country’s banking sector is now equipped with a modernized regulatory framework, comprising six new laws and numerous ordinances.

Key Updates

The key updates include:

  • The Financial Services Act (FinSA), which introduces stricter regulations for asset managers and trustees, as well as enhanced transparency requirements for financial instruments.
  • The Financial Institutions Act (FinIA) has also been updated to ensure that independent portfolio managers are subject to prudential supervision.

Highlights of the FinSA and FinIA

Investor Protection

  • Extended transparency requirements for customers
  • Stricter regulations for asset managers and trustees
  • Conduct rules for investment advice have been refined, including stricter documentation duties and suitability assessments

Prospectus Requirements

  • Overhauled to improve legal certainty

Organizational Measures

  • Financial service providers must take organizational measures to ensure proper training of client advisors

Ordinances: FinSO, FinIO, and SOO

The Financial Services Ordinance (FinSO), Financial Institutions Ordinance (FinIO), and Supervisory Organisations Ordinance (SOO) have also come into force. These ordinances provide implementing provisions for the FinSA and FinIA, including consultation and information duties for financial service providers.

Key Takeaways from the Banking Sector

Removal of Special Legislation

  • The removal of special legislation governing civil proceedings against financial service providers is a welcome development

Absence of Offences Involving Negligence

  • The absence of offences involving negligence in the FinSA is a positive change

Minimum Standards for Training

  • The task of defining minimum standards for initial and ongoing customer advisor training has been left to financial service providers, allowing for flexibility and responsiveness to market developments

Implementation Timeline

The new regulations will be implemented over a two-year transition period, with most duties coming into force on January 1, 2020.