Frequently Asked Questions

• What exactly are electronic banking and electronic trading?
• What is an Internet bank?

• Is a special authorisation necessary for e-banking and e-trading?
• Are there special regulations for e-banking and e-trading?

• Which rules and regulations apply to opening accounts with Internet-only banks and Internet-only securities dealers?
• Can an account be opened with an Internet bank or an Internet securities dealer in Switzerland entirely online via the Internet?
• Can digital signatures be used to open accounts with banks and securities dealers?

• Is outsourcing of certain business activities permissible in e-banking and e-trading?
• Do data transmissions between client and bank/securities dealer have to be encrypted in e-banking or e-trading?
• What are the minimum requirements imposed by the SFBC with regard to encryption of information?
• Must confidential data be encrypted even if transmitted over a network connection between two banks or between a bank and its branches?

• Are there special rules and regulations governing trading in and distribution of Swiss and foreign collective investment schemes units via the Internet?

• Is official authorisation required for the issue of electronic money (CASH, e-cash and the like)?

• Are banks, securities dealers or investment fund management companies based in Switzerland allowed to offer their products and services to clients outside Switzerland via the Internet?
• Are banks and securities dealers based outside Switzerland allowed to offer their products and services to clients in Switzerland via the Internet?

The term 'electronic banking' (also called 'e-banking' and 'online banking') denotes the provision of banking services via electronic channels such as the Internet ('Internet banking') or mobile telephones ('mobile banking', 'm-banking'). Other phenomena that have already been around for some time, such as Bancomat ATMs or Telebanking ('PC banking', direct connection to the bank via telephone, formerly via Videotex), may be considered as forms of electronic banking. In the near future other channels, e.g. television ('TV banking'), will be made available for distribution of financial services. The term 'electronic trading' (also called 'e-trading', 'electronic brokerage' or 'e-brokerage') denotes the provision of securities trading services via electronic channels such as the Internet ('Internet brokerage', 'discount brokerage') or mobile telephones ('mobile trading', 'm-trading'). Electronic banking and electronic trading are collectively known as 'e-finance'.

An Internet bank is a bank which markets its services exclusively ('pure Internet bank', 'Internet-only bank', 'virtual bank') or primarily ('clicks-and-mortar bank') over the Internet or through other electronic channels. An Internet-only bank has no physical branches with bank counters. Internet banks, like all other banks, require a licence to operate from the SFBC. However, the business model of an internet-only bank or broker was hardly successful in Switzerland. Nowadays, the multichannel strategy adopted by traditional banks and brokers prevails which offers to the client the choice of various parallel communication- and distribution channels such as branches, telephone or internet.

The activities of banks and securities dealers generally require official authorisation in Switzerland, regardless of the channels through which their services are offered. Anyone wishing to offer e-banking and/or e-trading services in Switzerland must without exception obtain official authorisation as a bank or securities dealer. Existing banks and securities dealers, however, do not need to obtain special, additional authorisation if they wish to expand their operations to include services offered over the Internet.

Financial services offered via Internet are not subject to any special regulation in Switzerland. But the absence of specific e-banking and e-trading provisions does not mean that financial services and products offered electronically are unregulated. All the legal provisions governing conduct in a given area by any bank or securities dealer apply to e-banking and e-trading. These provisions have to be considered as applying analogously to the new forms

The same rules that apply to traditional banks and securities-dealers are applicable. These are particularly the Federal Law on Combating Money Laundering in the Financial Sector (available in German or French), the CDB 03 and the MLO SFBC .

No. Concerning the establishment of a business-relationship, the CDB 03 refers to the procedure for opening accounts by correspondence. Thereafter, the bank is required to verify the identity of the counter party by requesting a certified copy of an ID and by verifying the domestic address by recommended letter or by another comparable procedure.

In Switzerland there are currently no specific provisions for the use of digital signatures to identify new clients. To date the SFBC has not expressed a definite opinion on the permissibility of digital signatures but will decide on this issue as soon as a bank or securities dealer expresses a wish to use digital signatures to identify new clients. This has not yet occurred.

The permissibility of the outsourcing of certain activities by Internet banks and securities dealers is governed by the SFBC Circular on the outsourcing of business areas (SFBC 'Outsourcing Circular', 99/2). The Outsourcing Circular defines the conditions under which activities may be outsourced without the SFBC's prior approval. Since experience to date has shown that e-banking and e-trading involve a high degree of outsourcing, the Outsourcing Circular is a document of great significance to Internet banks and securities dealers.

Banks and securities dealers are obliged under the terms of banking and professional confidentiality ( Art. 47 of the Banking Act and Art. 43 of the Federal Law on Stock Exchanges and Trading in Securities) and data protection legislation to protect the confidentiality of client data at all times against exposure to unauthorized persons. For this reason, during transmissions over open networks such as the Internet, the data must be protected by means of encryption.

The SFBC has set no minimum requirements with regard to encryption. The institutions governed by the SFBC must, together with their statutory auditors, take steps to determine which encryption procedures and effective methods best protect the confidentiality of the information to be transmitted. However, the technology used should correspond to the latest developments in the field as well as conforming with the relevant international standards. 

This depends on how the confidential data are transmitted. If the transmissions take place over open networks such as the Internet (e.g. within an extranet or a virtual private network [VPN]), the data must be protected by means of encryption. If the communication takes place exclusively via telephone lines, the possibility of using encryption is to be examined.

The special provisions laid down in Switzerland's Collective Investment Schemes Act and namely in the SFBC-Circular 03/1 Public Offering (German or French) are applicable to the distribution of collective investment schemes units via the Internet.
The content of a website is considered to be public offering for collective investment funds if it is addressed to investors domiciled or with registered office in Switzerland. Nevertheless, if the website contains a "Disclaimer" that the visitor shall not be able to bypass or an access limitation where the visitor has to identy by indication of the namen and domicile or registered office public solicitation does not occur.

There are no specific provisions for the issue of electronic money in Switzerland. In general, the acceptance of deposits from the public is restricted to authorised banks. The SFBC, however, tolerates the transfer of funds of up to 3'000.- francs per customer to payment systems such as mobile phones or internet. Such funds must only be used for the purchase of goods and services and shall not yield interests. This policy is set out in the SFBC-Circular 96/4 Public Deposits for Non-Banks.

Such activities are not subject to specific regulatory restrictions in Switzerland. However, a number of foreign authorities charged with supervising banks, securities dealers and investment fund management companies consider a Website maintained by a foreign financial service institution in its own national language to constitute an advertisement for financial services or products in its country, which might not be permitted in the country in question without prior official authorisation. Therefore, before providing services or distributing products over the Internet to clients outside Switzerland, banks, securities dealers and investment fund management companies must check whether the local supervisory authorities allow such activities in their country.

Banks and securities dealers based outside Switzerland are allowed to offer their products and services to Swiss clients via the Internet providing they have no physical presence in Switzerland (branch offices, agencies) and do not employ anyone locally (as representatives). However, they may designate a paying agent in Switzerland without prior approval. Advertising by foreign-based banks on the Internet or in the Swiss media is deemed permissible by the SFBC even when such advertising is deliberately targeted at Swiss clients and there is access to this advertising in Switzerland. Different rules apply to the distribution of investment fund units.