The Swiss Bankers' Association has told Compliance Matters that Swiss banks are still obliged to tip their customers off about any pending investigations. The offence of 'tipping off' carries a penalty of two years' imprisonment in the UK.

It has long been the case that a Swiss bank must always tell one of its account-holders if the authorities are applying to look at the details of his account(s). The Financial Action Task Force's Recommendation 21 prohibits financial institutions, their directors, officers and employees from disclosing the fact that a suspicious transaction report or related information is being reported. It also says that they should be protected by law from criminal and civil liability for breach of any restriction on disclosure of information imposed by contract or by any legislative, regulatory or administrative provision, if they report their suspicions in good faith to their financial intelligence unit, even if they did not know precisely what the underlying criminal activity was, and regardless of whether illegal activity actually occurred. This protection is not yet available in Switzerland, which has some catching up to do if its banks are to act as effective 'stool pigeons' for the police and other authorities.

Sindy Schmiegel, the head of public relations at the trade body, said in an explanatory email: "The procedure today follows article 42a of FINMAG-Amtshilfe; clients have to be notified before an investigation in any case. This procedure, however, does not conform with international standards. In a broad legislation project which covers the whole financial market law architecture, the "clients’ rights procedure" will be changed in the appendix of the Law on Financial Markets Infrastructure (FINFRAG). The details of future clients’ rights procedures are currently being discussed in parliament. It seems that the future procedure will stipulate a case-by-case decision by the Financial Markets Supervisory Authority (FINMA) about whether a client should be informed previously [i.e. before being investigated]. An information to the client AFTER an investigation will always be the case. The new legal provisions are likely to enter into force in 2016.

"In the SBA’s view, compliance with international standards is very important; procedures in Switzerland should be adapted accordingly. FINMA has to be enabled to grant administrative assistance; this is likely to be the case with the new legislation."