The Swiss Financial Market Authority (FINMA) is the main regulatory and supervisory authority in Switzerland. FINMA is a functionally and personally independent governmental institution with extensive regulatory competencies. It is mandated to supervise banks, insurance companies, trading venues and facilities, securities dealers, collective investment schemes, fund management companies, asset managers for collective investment schemes and portfolio managers (so-called independent asset managers), trustees, and fintech innovators such license. In short, FINMA is responsible for microprudential supervision, that is, the firm-level and consolidated oversight of most financial firms.
Additionally, FINMA supervises the anti-money-laundering (AML) compliance of institutions under its supervision. For unlicensed financial intermediaries, AML supervision is conducted by the so-called self-regulatory organizations (SROs). Moreover, from 1January 2022 the ongoing business supervision of portfolio managers and trustees has been delegated to so-called supervisory organizations (SOs), which are founded at the private initiative of the asset management industry.
The regulatory aims pursued by FINMA are the protection of creditors, investors, financial service customers and holders of insurance policies; safeguarding the proper functioning of financial markets; and financial stability. To achieve these aims, FINMA has a broad range of enforcement tools. It may issue declaratory rulings and prohibitions from practicing a profession, publish supervisory rulings (“naming and shaming”), confiscate profits, appoint an investigating agent, and revoke the respective license. However, unlike financial market authorities in other jurisdictions, FINMA is not authorized to impose substantial fines or other criminal sanctions.
In addition to FINMA, the SROs and the SOs for portfolio managers and trustees, the Swiss National Bank (SNB) has specific regulatory competencies related to macroprudential supervision – that is, in respect of the stability of the whole financial system. For instance, the SNB is responsible for designating systemically important banks (SIBs), which means that these banks must meet additional regulatory criteria or recommend an increase of capital levels of certain banks (countercyclical capital buffer). Compared to FINMA, however, the regulatory competencies of the SNB can be considered rather narrow.
FINMA may: (i)carry out a supervisory review itself; (ii)arrange for the review to be carried out by an audit agent appointed by FINMA; or (iii)arrange for the review to be carried out by an auditor appointed by the supervised financial firm. As a general rule, FINMA does not conduct supervisory activities itself but delegates these tasks to audit agents. The same is expected for the newly created SOs. This leads to a high participation rate of audit firms in the supervisory process.
