FINMA’s Crackdown on Bank Violations Unveils Worrying Trend
The Swiss Financial Market Supervisory Authority (FINMA) is the primary regulator of the Swiss financial sector. As such, it is tasked with upholding the integrity of the industry and protecting investors and consumers from harm.
FINMA’s enforcement capabilities have been demonstrated in a number of cases, particularly those involving bankruptcies at Credit Suisse, money laundering at Julius Baer, and the fraudulent activities of Sanitas and KPT health insurance companies.
In each of these cases, FINMA was able to take swift and severe action that had a real impact in terms of ensuring that financial misconduct was addressed in a timely and effective manner, demonstrating the regulators commitment to ensuring that the Swiss financial sector remains a safe and secure environment for all stakeholders.
FINMA’s decision to present its results of the enforcement proceedings against Credit Suisse in a straightforward manner on Tuesday was a clear indication of their commitment to providing the public with accurate information.
Not only did they state that the bank had “seriously” violated its supervisory duties, but they also provided the consequences of this violation – such as the requirement that management must now periodically examine hundreds of its business connections for potential risks.
This decision to be forthcoming with the public about the consequences of the scandal is a strong testament to FINMA’s commitment to upholding the law. They are ensuring that Credit Suisse is held accountable for their actions and that the public is aware of the repercussions of the scandal.
This also serves as a clear warning to other banks that similar violations of supervisory duties will not be tolerated, and that FINMA will hold those responsible for any future breaches of the law.
FINMA has once again appointed an external supervisor for the big bank to ensure that their measures are properly implemented, including ensuring that the bank is compliant with all regulatory rules and requirements. He will review the bank’s policies and procedures, monitor their operations, and check if their regulations are properly followed.
FINMA’s Catalogue of Measures
FINMA has an extensive catalogue of measures that it can use to enforce proceedings for the purpose of restoring a company to its proper state. This is one of its sharpest weapons and allows them to intervene deeply in the operational management of failing institutions. FINMA can even confiscate profits earned through unclean dealings, ban individuals from the profession, or revoke the licences of institutions.
Every year, the supervisory authority concludes around 50-60 enforcement proceedings, half of which are related to banks, though these are only publicly communicated in exceptional cases.
Under Pressure from All Sides
Since FINMA is limited to the measures described above and not allowed to hand out fines, it has often been criticized for being ineffective, as seen in the example of Credit Suisse. This has led politicians to propose amending the law to grant FINMA the power to issue fines. The organisation, however, has expressed concern that fines could lead to wrongdoers not cooperating and making it more difficult to resolve the issue.
The Swiss banking industry has always been a major economic force in the country, and many banks are now pushing for more control over FINMA, the Swiss financial market regulator. They have been attempting to use political influence to weaken FINMA’s authority, and in some cases have been successful.
This pressure from the banking industry has caused concern among the Swiss public, who are worried that it will result in less oversight and more risk for the financial sector. At the same time, other sectors such as the insurance industry are also pushing for more control over FINMA, in an effort to protect their own interests. All of these initiatives have raised questions about the independence of FINMA and its ability to effectively regulate the Swiss financial market.
Only Time will Tell
In recent years, FINMA has launched enforcement proceedings against more than 20 banks due to serious violations of the law by bank employees, including Credit Suisse, Julius Baer, Bank Syz, Credinvest, Falcon Bank, Rothschild Bank, and the traditional bank BSI, which had its license revoked.
Some of the cases include the Mozambique loan scandal, the money laundering cases of the Brazilian oil company Petrobras, the Venezuelan state oil company PDVSA, the Malaysian sovereign wealth fund 1MDB and the corruption cases in the world football association Fifa.
FINMA has commented that these cases pose a threat to the Swiss financial centre, prompting the banks to modify their compliance structures. The success of these measures remains to be seen.
The above investigations into corruption and money laundering cases have revealed a worrying trend and brought the issue of structural compliance into the spotlight, prompting many banks to reinforce their internal compliance procedures. But despite all efforts, the long-term effectiveness of these changes remains uncertain, and only time will tell if the measures are truly successful in preventing future violations of the law.
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