The Swiss Criminal Code (SCC) provides for three categories of offences. A felony is an offence carrying a custodial sentence of more than three years, whereas a misdemeanour carries a custodial sentence not exceeding three years or a monetary penalty. Lastly, a contravention is an act that is punishable by a fine (Article 10 and 103 SCC).
Unless otherwise provided in the law, a monetary penalty may amount up to CHF1,080,000 (Article 34 SCC) and a fine up to CHF10,000 (Article 106 SCC).
In order for an offence to be punishable, intent – ie, knowledge and will – is necessary unless the law expressly provides otherwise. Intent is recognised as soon as the offender regards the realisation of the act as being possible and accepts this (Article 12 SCC).
A person may also be held liable for attempting to commit an offence, although the court may reduce the penalty in light of the circumstances (Article 22 SCC).
The right to prosecute is subject to a time limit of (Article 97 SCC):
The limitation period begins (Article 98 SCC):
The limitation period stops running if a judgment is issued by a Court of First Instance before its expiry.
Swiss criminal authorities are primarily competent to prosecute an offence when the offence has been committed in Switzerland (principle of territoriality). An offence is considered to be committed both at the place where the person concerned commits it and at the place where the offence has taken effect (principle of ubiquity, Article 8 SCC).
The place of commission in cross-border white-collar offences is rather largely interpreted, resulting in a relatively broad interpretation of Swiss jurisdiction.
As an example, bribery offences are considered as being committed in Switzerland as long as:
In order to trigger Swiss jurisdiction, it is moreover sufficient that the act is only partially committed in Switzerland. Even an attempt is sufficient, although mere preparatory acts are not.
Swiss jurisdiction in the context of cross-border corporate criminal liability is also rather broadly admitted, and may cover situations where the actual offence committed by the individual within the company is not, itself, subject to Swiss jurisdiction. According to Swiss legal authors, the place of commission in relation to corporate criminal liability is both the place where the initial offence occurred, as well as the place where the lack of adequate compliance organisation in the company is located; ie, where the adequate measures to prevent the commission of the offence should have been taken.
Companies with their seat in Switzerland will thus always be subject to Swiss jurisdiction, irrespective of where the actual offence was committed. However, companies with their seat outside Switzerland will only be subject to Swiss jurisdiction if the offence is committed in Switzerland, or when the lack of adequate organisation may also be attributed to a department or a branch of the enterprise active in Switzerland.
Finally, Swiss criminal authorities also have extraterritorial jurisdiction in some specific cases, such as when:
The SCC provides for two forms of corporate criminal liability.
The first form is a subsidiary liability (Article 102 §1 SCC): if a felony or misdemeanour is committed in a company in the exercise of commercial activities in accordance with the objects of the company and if it is not possible to attribute this act to any specific natural person due to the inadequate organisation of the company, then the felony or misdemeanour is attributed to the company. Inadequate organisation must be the reason why criminal authorities could not determine which natural person actually committed the offence. Therefore, as a subsidiary liability, companies may only be found guilty if no natural person may be prosecuted.
The second form, much more incisive, is a primary liability (Article 102 §2 SCC): for an exhaustive list of specific and serious offences listed below, a company may be held criminally liable irrespective of the criminal liability of any natural persons, provided it is responsible for failing to take the reasonable organisational measures required to prevent such an offence. If a specific individual can be identified as the offender, both the offender and the company may be held liable. This provision is limited to the following offences: criminal organisation, financing of terrorism, money laundering, bribery of Swiss public officials, granting an advantage, bribery of foreign public officials and private bribery.
In both cases, the company is liable to a fine of up to CHF5 million.
Furthermore, managers and directors of an enterprise might be held personally liable for the offences committed within the enterprise if:
The transmission of criminal liability to the new entity in the case of merger or acquisition is not regulated by law and is the subject of doctrinal controversy.
Victims of a white-collar offence may claim compensation for their loss under Article 41 of the Swiss Code of Obligations before the criminal court competent to hear the case. Such a claim must be filed together with the criminal claim. Compensation might be granted provided that:
Under certain conditions, such as in the event that the civil claim would cause unreasonable expense and inconvenience, the criminal court may make a decision in principle on the civil claim and refer it to the civil court (Article 126 Swiss Criminal Procedure Code, or SCPC).
Class actions to claim compensations are currently not available under Swiss law. The Swiss legislator views it as a gap in the legal system and is considering a draft law to create group transaction procedures.
Recent legislative developments in white-collar offences in Switzerland include the amendment to Swiss law in 2016 with regards to measures against money laundering and against the financing of terrorism as well as amendments to corruption legislation. These adjustments arise from the implementation of soft law recommendations, such as those of the Financial Action Task Force (FATF) aiming to “set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.” Such recommendations concerned the laundering of tax fraud proceeds, the scope of the Anti-Money Laundering Act (AMLA), clarification regarding the requirement of identity of the beneficial owner and the prohibition of private corruption, in particular as a consequence of the Fifa corruption case that was widely covered in the media.
Moreover, the Federal Council recently suggested the addition of a new disposition in the SCC, which would cover terrorist organisations. Individuals participating or supporting an organisation pursuing the goal to commit acts of violence in order to intimidate a population would be facing up to ten years of custodial sentences or a monetary penalty. The introduction of such a disposition in the SCC would greatly impact anti-money laundering legislation, as participation in such an organisation would constitute a case of qualified money laundering and as due diligence obligations under the AMLA would be extended to assets suspected of belonging to a terrorist organisation.
The public prosecutor is responsible for the uniform exercise of the state's right to punish criminal conduct. It conducts investigations, pursues offences within the scope of the investigation, and, where applicable, brings charges before the Tribunal and acts as prosecutor during the trial (Article 16 SCPC).
In principle, this competence lies with the public prosecutor's office of the canton where the offence was committed.
However, for a limited list of financial offences – ie, participation in or support for a criminal organisation, financing of terrorism, money laundering, insufficient diligence in financial transactions and bribery – the material competence lies with the Federal Office of the Attorney General (OAG) if:
Furthermore, when the white-collar offence is committed within a regulated financial institution (ie, banks, insurance companies, exchanges, securities dealers, collective investment schemes, and their asset managers and fund management companies, distributors and insurance intermediaries), it might fall under the regulatory and administrative jurisdiction of the Swiss Financial Market Supervisory Authority (FINMA).
FINMA has a specific enforcement division competent to investigate suspected violations of supervisory law and, if necessary, initiates enforcement proceedings. When those violations fall under criminal law, FINMA may file a complaint with the competent criminal authorities (the Federal Department of Finance, the OAG or the cantonal public prosecutors’ office) and exchange information with them.
Criminal investigations are initiated by police enquiries or the opening of a formal investigation by the competent public prosecutor (Article 300 SCPC).
The police might initiate enquiries based on a complaint filed with them, instructions from the public prosecutor or their own findings (Article 306 SCPC). Such initiation does not require a formal decision, but the SCPC provisions, in particular the usual procedural rights of defence, apply from the outset of the police enquiries.
The public prosecutor opens a formal investigation if there is a reasonable suspicion that an offence has been committed based on the information and reports from the police, a criminal complaint filed directly with it or its own findings, or if it intends to order coercive measures. The investigation is formally opened with a written ruling that is non-contestable (Article 309 SCPC).
The public prosecutor is in principle obliged to commence and conduct proceedings that fall within its jurisdiction where it is aware of or has grounds for suspecting that an offence has been committed (Article 7 SCPC). It may, however, renounce to open an investigation and immediately issue a no-proceedings order if the offence’s constituent elements are clearly not fulfilled, if there are procedural impediments (eg, lack of jurisdiction, time-barred offence), or if:
In white-collar crime matters, the opening of an investigation is often triggered by a denunciation received from the Money Laundering Reporting Office Switzerland (MROS). The MROS functions as a relay and filtration point between financial intermediaries, such as banks, and the competent public prosecutor. Under the AMLA, financial institutions have an obligation to report to the MROS suspicious activities in connection with money laundering, financing of terrorism, money of criminal origin or criminal organisations. Failure to comply with this obligation is a criminal offence. The MROS analyses these reports and if it should consider that there are reasonable grounds to suspect that an offence has been committed, communicates them to the public prosecutor for follow-up action.
Investigative authorities may use all legal means of evidence that are relevant and appropriate to establish the truth. The use of coercion, violence, threats, promises, deception and methods that may compromise the ability of the person concerned to think or decide freely are prohibited when taking evidence, even if the person concerned consents to their use (Article 140 SCPC).
When necessary, the public prosecutor, the Tribunal and in some cases the police may order coercive measures. These must be necessary and proportionate, and there must be a reasonable suspicion that an offence has been committed (Article 197 SCPC).
Coercive measures include the following.
Obtaining Documents and Information from a Company under Investigation
Request to produce documents
The competent authority may request the company to produce specific documents.
In principle, it may not accompany this request with any threat of penalty. As an accused, the company benefits indeed in principle from the same defence rights as a natural person, including the privilege against self-incrimination. It may thus not be compelled to incriminate itself and is entitled to refuse to co-operate in the criminal proceedings (Article 113 SCPC).
The application of the privilege against self-incrimination to companies has been limited by case law in relation to companies that are regulated financial institutions, and thus subject to certain record-keeping obligations under supervisory law. According to Switzerland's Supreme Court, the assertion of this privilege must not be a means to circumvent the criminal authorities’ legal right to access documents that those financial institutions are obliged to establish and store under the legislation on money laundering.
Search and seizure of company documents
Irrespective of its privilege against self-incrimination, the company must submit to the coercive measures provided for by the law (Article 113 SCPC). If it refuses to collaborate, the competent authority may order the above-mentioned coercive measures, including, in particular, the search and seizure of the companies’ records and recordings.
Searches must be authorised by written warrant. In cases of urgency, they may be authorised orally, but must be confirmed subsequently in writing (Article 241 SCPC).
Companies have an obligation to tolerate the search and cannot obstruct it.
When the search concerns documents or other records, including electronic data, their owners – ie, the company managers and the concerned employees – have the right, before the search, to express their views on their content and to indicate to the officials what documents and records cannot be searched or seized.
This is in particular the case for the following documents and records:
If no agreement can be reached with the officials, their owner can request their sealing (Article 248 §1 SCPC). In such a case, the officials are not allowed to examine them. They might still proceed with a summary examination (limited, for instance, to the reading of the title of the documents) in order to determine whether they want to seize them.
The seals must be requested immediately, or, at the latest, at the end of the search.
If they still want to use the sealed documents, criminal authorities must file a request before a Tribunal for the removal of the seals within 20 days. Failing that, the sealed records and property shall be returned to their owner (Article 248 §2 SCPC).
Questioning of persons
Criminal authorities may question any person as long as their questioning is relevant and appropriate to establish the truth.
The rights and obligations of these persons will depend on their status.
Swiss law contains neither rules obliging companies to conduct internal investigations nor specific rules on the matter.
Companies are, however, subject to obligations stemming from various legal sources that indirectly require them to conduct such investigations.
In particular, companies may be held criminally liable when they have failed to take the adequate organisational measures allowing them to identify the author of an offence or to prevent the commission of offences within their entity (Article 102 SCC). While Swiss law does not specify what those adequate organisational measures are, the implementation of efficient internal investigations processes is usually considered to be part of it.
Furthermore, regulated financial intermediaries are subject to investigation and reporting duties under the Anti-Money Laundering Act. The duty to report suspicious activities to MROS (Article 9 AMLA) in particular requires the company to conduct the necessary investigations to be able to report any arising suspicions immediately. Failure to comply with this duty is sanctioned with a fine (Article 37 AMLA).
Besides, regulated financial intermediaries have a duty to provide FINMA with all the information and documents that it requires to carry out its supervisory tasks (Article 29 §1 Financial Market Supervision Act, or FINMASA). They must also immediately report to FINMA any incident that is of substantial importance to the supervision (Article 29 §2 FINMASA). The wilful provision of false information to FINMA is sanctioned by a custodial sentence of up to three years or a monetary penalty, respectively by a fine of up to CHF250,000 in the case of negligence (Article 45 FINMASA). The mere failure to comply with the duty to co-operate is not in itself punishable, but it may lead FINMA to open an enforcement investigation and appoint an independent investigative agent to conduct an internal investigation within the company. If the violations of supervisory law are confirmed, FINMA may apply serious sanctions.
Financial intermediaries are thus indirectly obliged to conduct the necessary internal investigations to be able to provide FINMA with correct information, prevent intrusive investigative measures and avoid sanctions.
Active and passive international mutual legal assistance is governed, in the first place, by the applicable international or bilateral treaty existing between Switzerland and the requesting or requested state.
Switzerland is a party to numerous international treaties, including, in particular, the European Convention of 20 April 1959 on Mutual Assistance in Criminal Matters (ECMA) and the European Convention of 3 December 1957 on Extradition (CEExtr). It has also concluded numerous bilateral mutual assistance treaties with foreign states such as the USA, Australia and Canada.
In the absence of such a treaty, the conditions under which mutual assistance may be granted are set out in the Act on International Mutual Assistance in Criminal Matters (IMAC). In such a case, a foreign request will generally be granted by Switzerland only if the requesting state guarantees reciprocity (Article 8 IMAC).
The Federal Office of Justice is competent to receive requests from foreign authorities. After a summary examination of the request as to whether it meets the formal requirements, it will forward it to the appropriate executing authority; ie, either the cantonal public prosecutor’s office or the OAG.
Mutual assistance measures include the interviewing of witnesses and suspects, the seizure and handing over of evidence and documents as well as objects and assets, the search of premises and the seizure of property as well as arrest of persons for the purpose of an extradition. Coercive measures may only be ordered if the offence prosecuted abroad is also punishable in Switzerland (principle of dual criminality).
Mutual legal assistance will notably be refused in the following cases:
Extradition requests from foreign states are governed by the applicable international or bilateral convention, and, in particular, the above-mentioned CEExtr and/or the IMAC, which contain similar provisions. According to them, extradition might be granted for white-collar offences provided, notably, that the relevant offence is punishable by deprivation of liberty for a maximum period of at least one year both under the law of Switzerland and under the law of the requesting state, and is not subject to Swiss jurisdiction (Article 2 CEExtr).
If, at the end of its investigation, the public prosecutor regards the grounds for suspicion as sufficient, it shall bring charges before the competent criminal Tribunal of first instance. The indictment is non-contestable (Article 324 SCPC).
Unless the conditions under Articles 52, 53 or 54 SCC are met (see 2.2 Initiating an Investigation), the public prosecutor is in principle obliged to bring charges. The abandonment of proceedings is only possible if the impunity of the accused’s acts is clear or if conditions of the criminal action are obviously lacking. The principle in dubio pro reo does not apply at this stage: if the legal or factual situation is not clear, it is for the trial judge to decide on the accused’s culpability (in dubio pro duriore).
Deferred prosecution agreements do not currently exist under Swiss law. This could be remedied in the future as the OAG recently suggested the introduction of such a mechanism for companies in the SCPC.
Swiss criminal authorities have used the discretion offered by Article 53 SCC as an alternative mechanism to resolve a criminal investigation without a trial (see 2.2 Initiating an Investigation). As an example of such application, the Geneva public prosecutor opened in 2015 an investigation against the bank HSBC for aggravated money laundering. The bank quickly accepted to pay a certain amount to repair the illicit acts committed by the bank. Eventually, the Geneva public prosecutor accepted the abandonment of the proceedings against HSBC pursuant to Article 53 SCC, in exchange for the payment of CHF40 million in favour of the Geneva state.
Swiss law provides for two procedures that allow a certain level of negotiations between the public prosecutor, the claimant and the accused.
At any time prior to bringing charges, the accused may request the public prosecutor to conduct Accelerated Proceedings, provided the following conditions are met:
If he accepts Accelerated Proceedings, the public prosecutor discusses with the parties the verdict, the sentence and the civil compensation.
If all parties reach an agreement, the public prosecutor drafts the indictment and sends it to the criminal Tribunal of first instance (Article 360 SCPC).
The latter’s role is then limited to verifying whether the conditions of the Accelerated Proceedings are met: the Tribunal does not conduct any investigations (Article 361 SCPC). It either confirms the indictment or sends it back to the public prosecutor to start an ordinary procedure (Article 362 SCPC).
Summary Penalty Order
The public prosecutor might issue a Summary Penalty Order if:
Unless it is challenged by a party within ten days, the Summary Penalty Order becomes a final judgment and the case does not reach the trial phase.
Although the Summary Penalty Order is not supposed to be a negotiated procedure, criminal authorities tend to use it as such as it allows flexibility. Companies also favour this instrument to settle their case as this permits them to avoid a public hearing.
Swiss law does not specifically deal with criminal company law and corporate fraud offences, but the following general offences may, in particular, be committed in a corporate context.
Fraud (Article 146 SCC)
Article 146 SCC punishes any person who, with a view to securing an unlawful gain for himself or another, maliciously induces an erroneous belief in another person by false pretences or concealment of the truth, or reinforces an erroneous belief, and thus causes that person to act to the prejudice of his or another's financial interests.
The offender faces a custodial sentence of up to five years – ten if he acted for commercial gain – or a monetary penalty.
Criminal Mismanagement (Article 158 SCC)
Article 158 punishes any person who has been entrusted with the management of the property of another or the supervision of such management, and in the course of and in breach of his duties causes that other person to sustain financial loss.
The person acting in the same manner in his capacity as the manager of a business but without specific instructions is liable to the same penalty.
The offender faces a custodial sentence up to three years – five if he acted for commercial gain – or a monetary penalty.
Misappropriation (Article 138 SCC)
Article 138 SCC punishes any person who, for his own or for another’s unlawful gain, appropriates moveable property belonging to another but entrusted to him, or unlawfully uses financial assets entrusted to him.
The offender is liable to a custodial sentence of up to five years or to a monetary penalty.
Forgery of Documents (Article 251 SCC)
Article 251 SCC punishes any person who, with a view to causing financial loss or damage to the rights of another or in order to obtain an unlawful advantage for himself or another, produces a false document, falsifies a genuine document, uses the genuine signature or mark of another to produce a false document, falsely certifies or causes to be falsely certified a fact of legal significance, or makes use of a false or falsified document in order to deceive.
The offender is liable to a custodial sentence of up to five years or to a monetary penalty.
Active and Passive Bribery of Swiss Public Officials
Swiss criminal law prohibits in the first place the active bribery of Swiss public officials, which is the act by which a person offers, promises or gives a public official an undue advantage, for his own benefit or for the benefit of any third party, in order to cause that public official to carry out or to fail to carry out an act in connection with his official activity that is contrary to his duty or dependent on his discretion (Article 322ter SCC).
Passive bribery – the act by which the public official demands, secures the promise of or accepts such an undue advantage within the same circumstances – is similarly punishable (Article 322quater SCC).
Offenders face a custodial sentence of up to five years or a monetary penalty.
Active and Passive Bribery of Foreign Public Officials
Switzerland extended the prohibition of bribery to foreign public officials by introducing the offence of active bribery of foreign public officials in 2000, and passive bribery of public foreign officials in 2006 (Article 322septies SCC).
The material conditions and the sanctions are the same as for the offences of bribery of Swiss public officials.
Granting and Acceptance of an Advantage (only for Swiss Public Officials)
Swiss law makes a distinction between “bribery” in the narrow sense and “granting of an advantage”. Both the active and passive behaviour are prosecuted (Article 322quinquies and 322sexies SCC).
Unlike bribery, the undue advantage is not connected to a specific act or omission of the bribed public official, but is rather given or accepted in order for the public official to carry out his official duties. While the payment of bribes is in a relationship of exchange with the undue advantage, the granting of an advantage refers to unjustified favours given or accepted without any concrete consideration in return. It includes facilitation payments or undue advantage given with a general view to establish a positive climate for the future execution of official duties.
Unlike the offence of bribery, the offence of granting an undue advantage is not prosecuted with regard to foreign officials.
Offenders face a custodial sentence of up to three years or a monetary penalty.
Active and Passive Bribery in the Private Sector
Active and passive bribery in the private sector is also punished under Swiss law (Article 322octies and 322novies SCC). Bribery of private persons presupposes a tripartite relationship in which one person connected to another by a relationship of trust and loyalty – such as an employee, an agent or a partner – receives an undue advantage from a third party in order to act or fail to act, within the context of his professional or commercial activities, in breach of his trust and loyalty duties to his employer, principal or partner. The prohibition of private bribery aims at protecting trust and loyalty in business relationships by sanctioning the breach of private-law duties.
The mere “granting of an advantage” is not punishable between private parties, which means that only undue advantages that are connected to an actual breach of the recipient’s trust and loyalty duties may be punishable. As a result, undue advantages given or accepted with a general view to create, maintain or improve business relations between two private parties are not punishable under Swiss law.
Offenders face a custodial sentence of up to three years or a monetary penalty.
Swiss law does not provide for a specific obligation to prevent bribery, nor to maintain a compliance programme. Since Article 102 §2 SCC sanctions companies that failed to take all reasonable organisational measures to prevent bribery and corruption offences, companies often implement anti-bribery programmes to mitigate the risk of criminal liability.
Insider dealing and market abuse are governed by the Financial Market Infrastructure Act (FMIA) and subject to federal jurisdiction (Article 156 FMIA).
Exploitation of Insider Information (Article 154 FMIA)
Article 154 FMIA sanctions the exploitation of insider information to gain a pecuniary advantage for itself or for a third party by:
The sentence depends on the way the insider obtained the insider information:
Market Manipulation (Article 155 FMIA)
Article 155 FMIA sanctions the substantial influence of the price of securities admitted to trading on a trading venue in Switzerland with the intention of gaining a pecuniary advantage for itself or for another by:
Market manipulation is subject to a custodial sentence of up to three years – five if the pecuniary advantage exceeds CHF1 million – or a monetary penalty.
Swiss tax law distinguishes between tax evasion and tax fraud.
Tax evasion is the intentional or negligent reduction of the tax claim to the detriment of the State; eg, by not declaring tax-relevant facts or filing incomplete declarations. It is subject to a fine and is an administrative infringement, subject to the competence of the tax authorities.
Tax fraud is a qualified form of tax evasion implying the use of falsified documents. It is sanctioned with a custodial sentence of up to three years or a monetary penalty of up to CHF1,080,000 and is a criminal offence subject to the competence of the criminal authorities.
Swiss law does not provide for a specific obligation to prevent tax evasion.
Since 1 January 2016, however, qualified tax evasion may be a predicate offence to money laundering if (i) the evasion qualifies as tax fraud under Swiss tax law and (ii) the evaded tax exceeds the sum of CHF300,000 per tax period (Article 305ter § 1bis SCC).
As a result, an obligation to prevent tax fraud indirectly ensues from Article 102 SCC, as the company failing to take the reasonable organisational measures required to prevent money laundering may be held criminally liable.
A similar indirect obligation ensues from Article 9 AMLA. According to that provision, financial intermediaries have investigation and reporting duties when they suspect that assets involved in the business relationship are the proceeds of an aggravated tax fraud. Non-compliance is punishable by a fine not exceeding CHF500,000, respectively CHF150,000 francs if the failure is due to negligence (Article 37 §2 AMLA).
Companies must keep and preserve records of their accounts in order to reflect their financial standing. The exact requirements vary depending on the size of the company. In principle, financial records must be kept for ten years.
The main offences related thereto are:
Cartels are governed by the Federal Act on Cartels and other Restraints of Competition (CartA).
The CartA provides for the following offences:
Offenders shall be charged with a fine of up to 10% of the turnover achieved by the company in Switzerland in the preceding three years (Article 49a § 1 CartA).
The CartA is enforced by the Swiss Competition Commission (ComCo), which is competent to impose administrative sanctions on companies. No charge may be brought against individuals under CartA.
Unfair competition is governed by the Unfair Competition Act (UCA), which contains criminal law provisions.
According to Article 23 UCA, intentional unfair competition may be sanctioned with a custodial sentence of up to three years or a monetary penalty. The provision covers various behaviours, such as unfair advertising and sales methods (Article 3 UCA), inducement to breach or termination of contract (Article 4 UCA), exploitation of the achievements of others (Article 5 UCA), violation of manufacturing or trading secrets (Article 6 UCA), non-compliance with working conditions (Article 7 UCA) and use of abusive Conditions of Business (Article 8 UCA).
There is no proper consumer law in Switzerland. Provisions related to the protection of consumers are scattered in numerous acts, such as the Act on Consumer Information, the Act on Product Liability, the Act on Product Safety and the Act on Consumer Credits.
Each of these acts provides for administrative and criminal sanctions in the event of non-compliance.
The SCC sanctions the following computer-related offences.
Lastly, Article 162 SCC sanctions the breach and exploitation of manufacturing or trade secrecy that the offender is under statutory or contractual duty not to reveal. The sanction for such an offence is a custodial sentence of up to three years or a monetary penalty.
The Federal Act on the Implementation of International Sanctions (Embargo Act, EmbA) governs coercive measures enacted by Switzerland to implement sanctions ordered by the United Nations, by the Organization for Security and Co-operation in Europe or by Switzerland's most significant trading partners and that serve to secure compliance with international law, and in particular the respect of human rights.
A “simple” breach of EmbA provisions is punishable by a custodial sentence of up to a year or a monetary penalty of up to CHF540,000. A “qualified” breach is punishable by either a custodial sentence of up to five years or a monetary penalty of up to CHF540,000. In the case of negligence, a monetary penalty of up to CHF270,000 may be issued.
Moreover, the Federal Act on the Control of Dual-Use Goods, Specific Military Goods and Strategic Goods (Goods Control Act, GCA) sets forth provisions relating to export restrictions. Breaches of these provisions can lead to custodial sentencing of up to three years or a fine of up to CHF1,000,000, and in severe cases a custodial sentence of up to ten years and a fine of up to CHF5 million.
Article 160 SCC sanctions any person who takes possession of, accepts as a gift or as the subject of a pledge, conceals, or assists in the disposal of goods that he knows or must assume have been acquired by way of an offence against property. Intent is required. The concealment predicate offence may be any offence that has the effect of removing a good from the estate to which it belonged.
Unlike what is applicable with money laundering, the author of the predicate offence may not be held liable for both the predicate offence and the concealment.
If the predicate offence is prosecuted only on complaint, concealment is prosecuted only if a complaint was filed in respect of the predicate offence.
Concealment is sanctioned with a custodial sentence of up to five years – ten if the offender acted for commercial gain – or a monetary penalty. If the sentence applicable to the predicate offence is lighter, that sentence is applicable to concealment too.
Aiding and abetting are also liable to prosecution.
The wilful abetting of another to commit a felony or a misdemeanour, provided the offence is committed, is subject to the same sentence as the commission of the offence. The attempt to abet someone to commit an offence is only punishable if the offence is a felony – ie, if it carries a custodial sentence of more than three years – and is subject to the same offence as the attempt to commit that felony (Article 24 SCC).
The wilful aiding of another to commit a felony or a misdemeanour is subject to a reduced penalty (Article 25 SCC).
Money Laundering (Article 305bis SCC)
Money laundering is the act aiming at frustrating the identification of the origin, the tracing or the forfeiture of assets that one knows or must assume originate from a felony or aggravated tax misdemeanour (Article 305bis SCC). Constituent elements of money laundering are thus the following.
The offence is aggravated, in particular, where the offender:
Money laundering is subject to a custodial sentence of up to three years – five in the aggravated case – or to a monetary penalty.
Insufficient Diligence in Financial Transactions (Article 305ter SCC)
Article 305ter SCC introduces for professionals working in the financial sector a legal duty to identify the beneficial owner and sanctions the failure to do so.
Any person who, as part of his profession, accepts, holds on deposit, or assists in investing or transferring outside assets and fails to ascertain the identity of the beneficial owner of the assets with the care that is required in the circumstances is liable to a custodial sentence of up to one year or to a monetary penalty (Article 305ter SCC).
Further Obligations to Prevent Money Laundering under Supervisory Law
As seen above, regulated financial intermediaries are subject to investigation and reporting duties under the AMLA when they know or have reasonable grounds to suspect that assets involved in the business relationship are the proceeds of a felony or an aggravated tax fraud or are subject to the power of disposal of a criminal organisation (Article 9 AMLA).
Failure to comply with the duty to report suspicious activities to MROS is punishable by a fine not exceeding CHF500,000, respectively CHF150,000 if the failure is due to negligence (Article 37 AMLA).
There are no specific defences for white-collar offences in Switzerland.
The standard defence will thus be to argue that the constituent elements of the concerned offence are not fulfilled.
In this regard, the existence of an effective compliance programme may be an efficient defence in the context of corporate criminal liability, as it proves a certain degree of organisation within the company’s structure. It may thus support the company's affirmation that it did take all the reasonable organisational measures required to prevent such an offence, so that one of the constituent elements of Article 102 SCC – ie, the lack of an adequate organisation – is lacking.
With regards to offences against property, the offender is liable only on complaint and the maximum sanction is a fine when the offence relates only to an asset of minor value or where only a minor loss is incurred (Article 172ter SCC). Case law has set the limit of a “minor value” at CHF300.
Similarly, in cases of bribery, advantages are not regarded as undue when they are permitted under the regulations on the conduct of official duties or when they are negligible advantages that are common social practice (Article 322octies § 2 SCC). Small gifts may thus be regarded as lawful, as long as such a social practice may be proven in the context. The notion of “negligible” is debated but it is generally admitted that it may not exceed CHF300.
More generally, Article 52 SCC provides that Swiss authorities may decide not to prosecute an offender if the degree of culpability and the consequences of the offence are negligible.
Self-disclosure and full co-operation with the criminal proceedings might under some circumstances be considered as a ground for exemption from punishment under Article 53 SCC (see 2.2 Initiating an Investigation) or a mitigating factor under Article 48 letter d SCC justifying the reduction of the sentence.
Further specific leniency programmes exist in various matters, such as:
Specific measures regarding whistle-blowers have been introduced in the Federal Personnel Act in 2011 with regards to employees of the Confederation. The Act provides for specific channels to disclose suspected wrongdoings at work, depending on the seriousness of the matter.
Swiss law does not, however, set forth specific provisions protecting whistle-blowers in the private sector. As the latter are bound by an employment contract, whistle-blowing can result in the breach of said contract. Each case is judged in accordance with the general labour provisions contained in the Swiss Code of Obligations. According to the latter, the right for an employee to report suspected wrongdoings at work outside his workplace must be weighed against the different interests at stake. The dismissal of an employee whose report of wrongdoings was licit is abusive. In such case, the dismissal remains valid – the employee cannot, in particular, reclaim his employment – but the employer may be condemned to pay to him an indemnity of maximum six months’ salary, the usual sanction for an abusive dismissal.
With regards to business organisation, Swiss company law does not provide for an obligation to set up an internal reporting procedure. Such an obligation may indirectly ensue from other provisions, such as Article 102 § 2 SCC and the necessity to avoid criminal liability.
Likewise, labour law obliges the employer to take all the necessary and feasible measures to protect the employee’s personality rights. The Swiss Supreme Court has confirmed that the appointment of a person of trust, within or outside the company, to which employees can report potential abuses could be imposed on a company on this legal basis.
Every person is presumed to be innocent until he has been convicted in a judgment that is final and legally binding. The tribunal freely assesses the evidence based on its inner conviction formed over the entire proceedings. Where there is insurmountable doubt as to whether the factual requirements of an alleged offence are fulfilled, the tribunal shall proceed on the assumption that the circumstances more favourable to the accused occurred (in dubio pro reo) (Article 10 SCPC).
During the investigative phase, the criminal justice authorities investigate ex officio all relevant circumstances to the assessment of the criminal act and the accused. They shall investigate incriminating and exculpating circumstances with equal care (Article 6 SCPC).
In the trial phase, the burden of proof lies with the public prosecutor, which has to prove the relevant facts beyond reasonable doubt to obtain the conviction of the accused.
There are no specific rules governing the assessment of penalties in white-collar crime and the usual principles apply.
According to those, the Tribunal determines the sentence according to the culpability of the offender. It takes account of the previous conduct and the personal circumstances of the offender as well as the effect that the sentence will have on his life. Culpability is assessed according to the seriousness of the damage or danger to the legal interest concerned, the reprehensibility of the conduct, the offender's motives and aims, and the extent to which the offender, in view of the personal and external circumstances, could have avoided causing the danger or damage (Article 47 SCC).
Full co-operation of the offender may qualify as a mitigating circumstance justifying the reduction of the sentence (Article 48 letter d SCC).
With regards to the white-collar offences committed by companies, the financial standing of the company as well as organisational measures taken by the company are elements that will be taken into consideration by the Tribunal.
Corporate criminal liability has been applicable in Switzerland since October 2003. The key provision is Article 102 of the Swiss Criminal Code (SCC), which applies not only to private legal entities, but also to public entities (with the exception of local authorities), partnerships and sole proprietorships. For ease of reference, the word "corporation" used here is deemed to encompass any of the above entities.
In the first decade following its adoption, Article 102 SCC was only used on very rare occasions. However, over the last couple of years, the trend has changed and shows that the number of criminal investigations launched against corporations is steadily increasing. Some of these investigations relate to widely reported cases such as the prosecutions launched, on a cantonal or federal level, against Alstom, HSBC, Addax Petroleum, Petrobras, 1MDB, SICPA and NotaSys, to name a few.
Criminal investigations are very burdensome for the corporation involved, both in terms of human resources and financial costs. The corporation may face additional, unpleasant measures as a result of an ongoing criminal investigation such as dawn-raids of its premises, the seizure of its electronic and physical data and/or records, the interview of its staff, the freezing of its assets (whether or not related to the offence under investigation), and bad publicity. In addition, any ongoing criminal investigation will necessarily increase the scrutiny of the regulator, where applicable.
At the same time, criminal investigations against corporations can turn out to be a difficult and lengthy process for the prosecution authorities, in particular if means of evidence need to be gathered abroad through mutual legal assistance channels. Hence, until the outcome of the criminal proceedings, there always remains a degree of uncertainty as to what extent the authority will be rewarded for the time and energy deployed.
Against this backdrop, a corporation, and also the prosecution authorities, may have sound reasons to consider the possibility of settling the criminal proceedings by way of negotiation.
In order to better understand the incentives negotiated justice may represent for both the indicted corporations and the prosecution authorities, we will first briefly set out below the requirements of Article 102 SCC before turning to the options that are currently available under Swiss law in view of achieving a negotiated outcome. We will then present a procedural tool, inspired by both the Anglo-Saxon Deferred Prosecution Agreement and the French "Convention Judiciaire d'Intérêt Public", which could eventually find its way into the Swiss Criminal Procedure Code (CrimPC) in the future.
General Conditions for Liability Under Article 102 SCC
The application of Article 102 SCC assumes that the following three general requirements are met:
In addition, a particular link must be established between the felony or the misdemeanour committed within the corporation and the corporation's deficient organisation. As explained below, the nature of the link varies within Article 102 SCC, depending on the type of liability model that is applied.
Regarding the felony or misdemeanour committed by the individual within the corporation, the Swiss Federal Supreme Court recently held, in a milestone decision involving the Swiss Post, that the criminal authorities have to prove that the underlying offence is fulfilled in all its objective and subjective components. As a result of this case law, nowadays prosecution authorities tend to target more systematically all the individuals involved in the commission of the offence, which makes it vital for the defence teams advising the corporation and the relevant individuals to properly coordinate their actions in the frame of the proceedings.
Article 102 paragraph 1 SCC establishes a model of what is called "subsidiary liability". Pursuant to this model, which is applicable to any felony or misdemeanour, the corporation's criminal liability may be triggered where the underlying offence cannot be attributed to a determined natural person, due to a deficient organisation of the corporation.
The purpose of Article 102 paragraph 1 SCC is, essentially, to avoid gaps in criminal liability. Hence, where the natural person who committed the offence is identified, Article 102 paragraph 1 SCC does not apply.
Article 102 paragraph 2 SCC establishes a model of "primary liability", pursuant to which the corporation's criminal liability may be triggered where the underlying criminal offence was caused or facilitated by the deficient organisation of the corporation. Under this model, the corporation's liability may be engaged independently of, or in parallel to, that of the natural person who committed the underlying offence. Even if the offender lacks legal responsibility, eg, due to a mental disorder, through being found to have only a diminished responsibility or having passed away, the corporation may still be held liable for the criminal offence.
This second form of liability finds application only in relation to a limited number of criminal offences, which are exhaustively listed in Article 102 paragraph 2 SCC. The concerned offences are the following:
In the case of Article 102 paragraph 2 SCC, the corporation is held liable for having failed to take all the reasonable organisational measures that were required to prevent the commission of the underlying offence.
Fine, forfeiture and criminal record
Whether in the context of Article 102 paragraph 1 or paragraph 2 SCC, the maximum penalty incurred by the corporation under Swiss criminal law is a fine not exceeding CHF5 million. The actual amount of the fine is determined on the basis of the seriousness of the offence, the extent of the deficient organisation, the damage resulting thereof and the financial capacity of the corporation.
On top of the criminal fine, the authorities may also order the forfeiture of the assets that constitute the proceeds of the underlying criminal offence or, where such assets are no longer available and provided that the other requirements applicable to the forfeiture are fulfilled, the issuance of a compensatory claim in favour of the State, which is not limited by the maximum amount of the criminal fine foreseen by Article 102 SC.
There is currently no criminal record in Switzerland designed to reflect the convictions of corporations.
Available Negotiation Tools
Experience shows that, subject to certain exceptions (the case involving the Swiss Post being the most prominent example), most of the criminal investigations launched against corporations, so far, have never ended up in a trial before a Court. Leaving aside the scenario where a discontinuation of the proceedings is issued for lack of criminal conduct or other technical reasons (such as the expiration of a statute of limitation), it is a fact that the vast majority of criminal cases prosecuted to date against corporations were settled or sentenced by way of a negotiation with the competent Swiss prosecution authorities.
The three key negotiation tools currently available under Swiss law are abbreviated proceedings, summary penalty order and reparation.
Abbreviated proceedings are governed by Article 358 et seq. CrimPC. Inspired by the Anglo-Saxon plea bargain, abbreviated proceedings apply where the accused is prepared to confess all or part of the relevant facts reproached by the prosecution authority in exchange of a negotiation of conviction, the quantum and nature of the penalty and/or the extent of assets forfeiture. Furthermore, the accused must, in principle, recognise the civil claims raised by any private plaintiffs participating in the criminal proceedings. Abbreviated proceedings may only be initiated, officially, upon the request of the accused, however, in practice it is often the prosecution authority who informally sounds out the accused to test their appetite to engage such proceedings.
Once an agreement stands between the accused, the prosecution authority and, as far as the civil claims are concerned, the private plaintiffs, the agreement is turned into an accusation act (indictment) and submitted to the Court for approval. The Court holds a hearing and renders a judgment, ratifying the agreement reached, if it is satisfied inter alia that the accused has duly confirmed its confessions and that the charges brought are supported by the file of the proceedings.
It is important to note that, under the auspices of the CrimPC, the Office of the Attorney General Switzerland (OAG), ie, the federal prosecution authority, has developed its own practice, whereby abbreviated proceedings may also end up in a summary penalty order (see below), rather than an actual judgment from a Court. This practice does not seem compatible with the terms of the law and has been criticised by practitioners. In any event, it avoids the risk that the agreement is not ratified by the Court and the potentially negative publicity inherent to the hearing before the Court. It remains to be seen whether the OAG will uphold, amend or abandon such approach in the future.
Summary penalty order
The summary penalty order (Article 352-357 CrimPC) is rendered in a special and simplified proceeding. Until very recently, summary penalty orders were very popular amongst the OAG, which has used this tool (most of the time in combination with the abbreviated proceedings) to substantially resolve all the criminal investigations it has conducted against corporations so far.
According to Article 352 CrimPC, the prosecution authority shall issue a summary penalty order where the accused has accepted liability for the offence or where its liability has otherwise been satisfactorily established, provided that the sanction sought by the prosecution authority is a fine, a monetary penalty not exceeding 180 days, or a custodial sentence of no more than six months. By way of reminder, the fine incurred by a corporation pursuant to Article 102 SCC may reach CHF5 million. In addition to this fine, the authorities may order the forfeiture of the assets or the issuance of a compensatory claim in favor of the State.
The summary penalty order is not an actual judgment, but a judgment proposal submitted to the accused by the prosecution authority. The accused is free to accept or dismiss such proposal. However, in practice, where the criminal liability of a corporation is at stake, the content of the penalty order is negotiated upfront between the relevant corporation and the prosecution authority and a refusal is rather unlikely to happen, unless it emanates from a third party (eg, an employee or manager of the relevant corporation) impacted by its contents or outcome.
The institution of "reparation" is the third option currently available to an accused natural person or corporation willing to negotiate the outcome of a criminal investigation. It is governed by Article 53 SCC, which provides, in essence, that where the accused has repaired the damage caused or made all the efforts that could be reasonably expected to compensate the harm, the authority shall refrain from prosecuting, sending to trial or sentencing the accused, if the following three cumulative conditions are satisfied:
Often depicted as creating a judicial bias in favour of the rich and powerful who have the financial means to avoid prosecution and potential conviction, Article 53 SCC has become the subject of increasing criticism over the past years. As a result, Article 53 SCC was eventually amended, effective 1 July 2019, to narrow down its scope of application.
It should be noted, however, that the new requirement, according to which the offender shall have admitted the facts, does not amount to an admission of guilt as it does not include any concession on the intention to commit the relevant offence. The reference to the "fine" was newly introduced in the legal provision to make it clear that it also applies to corporations in the context of Article 102 SCC.
When the requirements of Article 53 SCC are met, the prosecution authority has, in principle, the obligation to discontinue the proceedings. Having said that, the authority enjoys a certain degree of discretion in assessing the fulfilment of such requirements, in particular, as to whether a "sufficient" reparation was offered by the accused, as well as the minimal nature of the interests in continuing the prosecution.
In 2015, Article 53 SCC was applied by the Geneva Prosecution Office to discontinue the proceedings against HSBC in relation to money laundering charges. In consideration of the discontinuation, the bank had agreed to pay CHF40 million to the State of Geneva. The same approach was later used by the Geneva Prosecution Office against Addax Petroleum, which was prosecuted for bribery of foreign public officials. In the latter case, a compensation of CHF31 million was paid by the corporation to the State of Geneva. Most recently, in February 2019, the State of Geneva announced that it had discontinued, based on Article 53 SCC, the criminal proceedings launched for money laundering and mismanagement of public interests against Teodoro Obiang, Vice-president of Equatorial Guinea. The compensation paid to the State of Geneva amounted to CHF1.3 million. Additionally, 25 luxury cars were forfeited and the proceeds of their sale will be used to fund – under the auspices of the Swiss Federal Department of Foreign Affairs – a social programme in favour of the local population in Equatorial Guinea.
In contrast to the practice of the Geneva Prosecution Office, the OAG has systematically refused, since 2017 at least, to apply Article 53 SCC to corporations, even in the cases in which the requirements of Article 53 SCC were met.
"Swiss Made" Deferred Prosecution Agreement
The OAG takes the position that the above-mentioned negotiation tools only partially achieve the objectives pursued, namely a remediation and improvement of compliance practices of the convicted corporations. Hence, in the context of discussions regarding a potential amendment of the CrimPC, in 2018 the OAG proposed to include a new Article 318bis CrimPC, which consists of a "Swiss made" deferred prosecution agreement mechanism, inspired by the practice of other countries (specifically the US, United Kingdom, France and Austria).
The purpose of such a deferred prosecution agreement would be to enable corporations, after full compensation of the consequences caused by their legal behaviour, to avoid criminal prosecution which often causes significant collateral damage both in the home country and abroad, such as losing the right to operate in a given jurisdiction, creating banking difficulties or affecting participation in public procurement tenders.
The agreement to be reached between the prosecution authority and the corporation within the framework of a deferred prosecution would pursue three main objectives:
The main conditions imposed on the conclusion of such a deferred prosecution agreement would be, first, a spontaneous denunciation, or at least the swift acceptance, of the criminal investigation by the corporation. The full cooperation of the corporation encompasses an acknowledgment of facts and the identification of the natural persons to whom the commission of the underlying offence can be attributed. Secondly, the corporation would have to fully repair the damage caused and, finally, it would have to implement amendments to the corporation's internal procedures where appropriate. These last conditions include compliance with a probation period (between two and five years) and periodic verification of the obligations imposed on the corporation by an independent monitor.
The main benefit of the "Swiss made" deferred prosecution agreement, as proposed in 2018 by the OAG, would be to shape obligations and commitments that are precisely tailored to the corporation and guarantee that they are fully complied with. This would also help reduce the competitive disadvantage that Swiss companies are currently facing; indeed, the law enforcement authorities of several countries already have the necessary tools to defer prosecutions in a much swifter and cost-efficient way than Switzerland is currently able to do, with the consequence that Swiss companies are often first prosecuted abroad.
At this stage, however, it is uncertain whether Switzerland is ready for such an innovative procedural tool. There is a great level of scepticism about the possibility for a corporation to avoid criminal conviction by simply paying a fine and implementing compliance improvements. The Swiss Federal Council has, for instance, recently announced that it would not support the OAG's proposal and has decided to exclude it from the ongoing revision of the CrimPC. Having said that, the debate is not yet closed, as it will now continue before the Parliament, which may reopen the discussion.
In conclusion, Swiss law distinguishes between the models of so-called primary and secondary criminal liability of corporations. The central and common element of both models is the corporation's defective organisation.
Prosecutions based on Article 102 SCC are often very complex and burdensome. If a corporation is willing to resolve a criminal investigation and try to negotiate a reasonable outcome with the prosecution authority, Swiss law currently offers three different procedural tools: abbreviated proceedings, summary penalty order and reparation.
Yet, these tools only partially enable the remediation of non-compliant practices within corporations. In this regard, the purpose of the "Swiss made" deferred prosecution agreement, as proposed by the OAG, is to provide enhanced incentives for corporations to investigate voluntarily, disclose and remediate potential wrongdoings, whilst at the same time protecting Swiss corporations that have international exposure.
US and UK law enforcement authorities have recently released updated Corporate Cooperation Guidelines clarifying the requirements that corporations should meet to receive "co-operation" credit. These Guidelines confirm that co-operating corporations shall identify and self-disclose the key persons involved in the commission of the offence in order to foster individual criminal prosecutions. Although it is currently uncertain if and to what extent it will be implemented in the CrimPC, the deferred prosecution agreement, as proposed by the OAG, is similarly encouraging corporations to co-operate, with the view to facilitate corporate investigations and to remediate to non-compliant business practices.