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Banking Compliance Rules in Switzerland: A Model for Global Regulation

Switzerland’s financial sector is one of the most strictly regulated areas of the economy, playing a crucial role in maintaining its attractiveness as a location for financial services. The primary goal of banking regulation in Switzerland is to protect individual bank customers, particularly creditors, and safeguard and enhance the stability of the banking and financial system.

Effective Regulation

The Swiss financial centre has an effective regime of both preventive and curative measures, making it one of the best regulated anywhere in the world. Banking and financial market regulation is implemented through a range of legal instruments, including:

  • Federal legislation
  • Federal Council ordinances
  • FINMA ordinances and circulars
  • Self-regulatory directives from the Swiss Bankers Association

Regulatory Bodies

The body responsible for overseeing and monitoring individual institutions is the Swiss Financial Market Supervisory Authority (FINMA), which functions as an independent federal regulatory authority. Alongside this microprudential regulation at the individual institution level, the Swiss National Bank has specific powers of macroprudential regulation in relation to the system as a whole.

Reforms Following the 2007-2008 Financial Crisis

In response to the financial crisis of 2007-2008, many areas of banking regulation in Switzerland have been substantially tightened up and improved. Examples include:

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

Ongoing Reforms

Work is currently underway to implement the remaining elements of the Basel reform package in Switzerland, with the Swiss Bankers Association closely involved through its national working group. Key areas of consideration include:

  • Proportionality of requirements
  • Effective tailoring to different institution circumstances
  • Meaningful assessment of expected economic effects

Monitoring Developments

The Swiss Bankers Association plays an important role in monitoring developments both globally and at the national level, and is committed to ensuring that regulation of the Swiss financial centre is both credible and competitive.

Additional Resources

For further information on banking compliance rules in Switzerland, see the websites of:

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