Federal Act on Banks and Savings Banks

The Swiss Federal Act on Banks and Savings Banks is a set of laws which governs the conduct and activities of Swiss banks. The Act, which in its original form was passed by the Swiss Federal Assembly in 1934, lays out the role of financial supervisory authority FINMA, defines the obligations of Swiss banks in the event of bankruptcy and the designation of privileged assets (bank depositor protection), and embeds bank customer secrecy into Swiss law.

The most significant legislation included in the Act is that relating to bank customer secrecy. Banking confidentiality had been considered best practice for centuries prior to the passing of the Act, and breaching confidentiality was already considered a civil offense before the Act was passed. The Federal Act on Banks and Savings Banks made bank customer secrecy a constitutional right. The Act makes the disclosure of bank customer information to third parties by bank employees a criminal offense punishable by a fine or up to 3 years imprisonment, or up to 5 years imprisonment when the bank employee receives compensation for the sharing of information.

Because the Act set out rules applicable to Swiss banks rather than simply guaranteeing rights to residents, the Act makes it possible for non-residents to protect their assets from oppressive governments because foreign governments may only inquire as to the assets of account holders who fall under their jurisdiction if those account holders are guilty of a crime under Swiss law.

While the Act remains in place and continues to govern Swiss banks, part of the provisions which it guarantees are undermined by bilateral agreements such as acceptance of the United States Foreign Account Tax Compliance Act (FATCA) and the Organisation for Economic Co-operation and Development’s automatic exchange of information on financial accounts (AEOI) standard by the Swiss Federal Government.

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