Swiss 'Super-Regulator' Takes Shape

by Ulrika Lomas, Tax-News.com, Brussels

24 April 2006

The Swiss parliament is currently considering plans to create a super-regulator, to be known as the Federal Financial Market Supervisory Authority (Finma), which will combine the existing Federal Banking Commission, the Federal Office of Private Insurance and the Money Laundering Control Authority.

Transparency International recently said that there were shortcomings in the country's money laundering laws, pointing out that the number of money laundering cases reported to the Money Laundering Control Authority was low compared with other major financial centres.

Although the MLCA has carried out a number of investigations and has imposed fines in some cases, it has not once applied the ultimate sanction of removing a licence.

The Swiss courts are often reluctant to agree to international requests for information. In January, 2006, Switzerland's highest court rejected a request for judicial assistance from the Russian authorities, relating to the handover of documents in the ongoing investigation into the embattled oil company Yukos. The Federal Tribunal partially upheld an appeal by several companies seeking to block the passing of documents to Russia detailing bank account information and financial dealings between Yukos and a number of Swiss firms. In doing so, the judges rejected the decision made by the Swiss federal attorney last July to hand over 80 files, out of the 1,300 it has in its possession, to the Russian authorities.

Eugen Haltiner, currently head of the Federal Banking Commission (SFBC), and a former senior UBS official, is expected to head up the new agency. The government hopes that Finma will help improve Switzerland's image as a financial centre. The new body will be independent in both its operations and finances, although it will answer to the government and be itself closely supervised. In May 2004 the SFBC called integrated financial market supervision an "absolute necessity", and that the proposal to merge supervision of banks, stock exchanges, and investment funds with that of insurance companies was an entirely sensible move.

The SFBC, together with the Finance Ministry and the Federal Office of Private Insurance has already drawn up guidelines for effective financial market regulation, which it incorporates in the regulatory process. Finma will have reinforced legal powers, including the ability to confiscate profits from illegal activities, such as insider trading, and the power to ban individuals or organizations.

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