SWITZERLAND: An Introduction to White-Collar Crime

Swiss criminal law has undergone numerous changes as a consequence of the upheavals taking place on the world stage.

Sanctions 

Sanctions are the most obvious example of this change. Traditionally, Switzerland had implemented sanctions issued by the United Nations Security Council. Sanctions of other bodies – in particular, the sanctions of the EU – were subject to a case-by-case assessment and not automatically implemented. Normally, this led to Switzerland deploying measures preventing the circumvention of the EU sanctions, but not to their adoption. After the Russian aggression against Ukraine in 2022, a paradigm shift took place within days and Switzerland successively adopted the ever-increasing European sanctions. This new approach, together with the relevance of Switzerland as a financial hub, led to a sharp increase of sanctions related work for the involved financial institutions, private practitioners and the authorities (in particular, the State Secretariat for Economic Affairs SECO and the Swiss Financial Market Supervisory Authority (FINMA)). While there has not yet been a large wave of enforcement actions related to sanctions issues, it is anticipated that such actions will gradually increase in the future.

Enforcement Action 

Switzerland's relevance as a financial centre has also resulted in a steady flow of cases related to regulatory proceedings. While enforcement proceedings of FINMA against financial institutions are far from new, there has in recent years been a shift to act against the involved individuals as well. As a matter of course, FINMA notifies the criminal authorities of any presumed criminal wrongdoing, resulting increasingly in separate criminal proceedings against individuals.

Corporate Criminal Liability 

Corporate criminal liability is another area going through changes, as prosecutions have become more numerous in recent years, mostly in AML and corruption-related cases. This stands in contrast to the first ten years after corporate criminal liability had been introduced in 2003, when barely any cases were prosecuted. Even today, the level of prosecution is still comparatively low and has recently drawn public criticism. By way of example, Transparency International's research has shown that only few convictions were registered since corporate criminal liability was introduced. The challenges for the criminal authorities are indeed considerable, especially as they tend to focus – rightly so – on large multijurisdictional cases. One of the main reasons that these cases are difficult to prosecute under Swiss law is the fact that the prosecution needs to provide proof of the underlying offenses committed by the individual perpetrators, such as the foreign bribery and corruption. Doing so is not only inherently difficult, but also slow and cumbersome as the evidence must usually be obtained abroad by mutual legal assistance proceedings. As the actual bribery is regularly committed in jurisdictions with challenging access to judicial assistance, establishing and proving the underlying offence takes time and is frequently not – or not entirely – successful. Despite these challenges, the prosecuting authorities have recently been able to resolve large-scale international corruption investigations, partially in close co-ordination with foreign authorities, including authorities from the USA and South Africa.

Federal and Cantonal Level 

In Switzerland, criminal prosecution takes place at both the federal and the cantonal level, largely depending on the subject matter. Additionally, administrative authorities such as the Federal Department of Finance usually prosecute criminal offences related to their specific competencies, adding to the complexity of the criminal law system. Defending cases in this multi-layered environment is by itself challenging. When it comes to corporate criminal liability, resolving a matter is further complicated by the fact that no Deferred Prosecution Agreements exist under Swiss law. The only comparable remedy consists of Article 53 of the Criminal Code, which allows the criminal authority to terminate a proceeding under restrictive conditions. Specifically, only smaller cases with a maximum penalty of one year of conditional imprisonment qualify and no public and private interest in the prosecution must exist. Most importantly from a practical perspective, the accused person or entity must fully accept the incriminated facts and repair any harm caused. As if these prerequisites were not tough enough, the Federal Prosecutor’s Office has – as a matter of policy – decided not to apply Article 53 at all. Conversely, cantonal public prosecutors such as the Geneva authorities continue to close cases based on Article 53.

This inconsistent practice is not only remarkable (and highly questionable) by itself, but also of practical relevance as Geneva in particular has in recent years been the focus of considerable prosecutorial activity – in no small measure due to its significance in private banking. After an initiative by the former Federal Prosecutor to introduce legislation adopting Deferred Prosecution Agreements more widely had failed a few years ago, a new initiative is currently being undertaken by private practitioners to revisit the topic, even though it may continue to face political resistance.

Speed of Process 

One point that deserves to be examined critically regarding Switzerland's approach to prosecuting white-collar crimes is the often slow speed at which cases are investigated and brought to trial. The highly international nature of the economy and the ensuing need for mutual assistance was already mentioned as a key factor for this slowness. A more mundane reason is the fact that the Swiss Code of Criminal Procedure is still deeply rooted in the 20th century, despite having entered into force only in 2011. This is readily apparent when it comes to white-collar cases and their reliance on large amounts of data. How data may be confiscated and used in criminal proceedings is still very much based on how paper documents served as evidence in the past. This is obviously an ill-suited approach when dealing with gigabytes and sometimes terabytes of data. While the problem has been recognised, a recent revision of the Swiss Code of Criminal Procedure entering into force in 2024 was uninspiring, essentially shortening some time limits and introducing higher obstacles to removing privileged documents from the record. This approach fails to address the underlying fundamental issues, including the fact that electronic data is of a very different nature than documentary records. What is needed is a state-of-the art system to deal with large data volumes and properly balancing the interests of all involved stakeholders, as well as the appropriate human and technical resources for the courts and authorities.

Overall, however, Switzerland's legal system continues to be efficient at prosecuting white-collar crime matters. This contributes to Switzerland's reputation as a financial market that punches way above the size of the country.