Enforcing supervisory law
The term "enforcement" covers all of FINMA’s investigations, proceedings and measures in relation to violations of supervisory law. FINMA investigates irregularities and information it receives about violations and, if necessary, initiates enforcement proceedings in accordance with the Administrative Procedure Act (APA). If the law has been violated, FINMA issues a contestable ruling imposing corrective measures. Enforcement proceedings are directed mainly at licence holders and those carrying out unauthorised activities, i.e. operating without the requisite FINMA authorisation. FINMA also takes action against specific individuals found to be responsible for serious violations of supervisory law.
For the years 2014 to 2018, FINMA published anonymous summaries of its enforcement rulings, an overview of court decisions, and statistical information in an annual enforcement report. FINMA now publishes this information in the form of a database for case reports, a database for court decisions and an area with figures and statistics on enforcement.
Phased approach
Financial market enforcement typically goes through the following phases:
informal investigation of a suspected violation,
initiation and conduct of enforcement proceedings,
contestable ruling or discontinuation of proceedings,
ruling possibly contested before the courts,
execution of FINMA’s legally binding orders.
Area of responsibility
Enforcement activity is directed mainly at licence holders to support supervision. In market supervision, it serves in particular to combat insider trading and market manipulation. As regards financial intermediaries operating in Switzerland without authorisation from FINMA and where such authorisation is required under financial market law, the aim is to remove them from the marketplace as they are in breach of the law. Enforcing laws designed to protect investors also means that FINMA can initiate and conduct insolvency and liquidation proceedings.
FINMA works together with other Swiss and foreign authorities to enforce financial market laws. Authorities cooperate at the national and international level and coordinate their investigations wherever possible and necessary.
FINMA’s authority to impose measures
FINMA’s goal in enforcement proceedings is always to impose the measures it deems most proportionate (enforcement instruments). Its powers are extensive. They include precautionary measures or measures to restore compliance with the law, withdrawing authorisation, liquidating unauthorised companies, issuing industry and activity bans and ordering the disgorgement of profits generated illegally. It can also publish final rulings naming those involved.
Internal separation of functions
Functions are strictly separated within FINMA, so that staff who conduct enforcement proceedings are not involved in the monitoring of licence holders. Responsibility for ongoing supervision lies with divisions other than Enforcement. A committee of the Executive Board (Enforcement Committee (ENA)) decides on the initiation and conclusion of enforcement proceedings, unless that power falls to the Board of Directors. The Enforcement Committee can delegate rulings in less important cases to the Head of Enforcement, who normally makes a decision as part of a divisional case committee, acting as a permanent member along with the heads of the Investigations and Proceedings sections.
Other bodies involved in enforcement
Besides FINMA, criminal prosecution authorities, supervisory organisations and self-regulatory organisations are also involved in enforcing financial market laws. Where irregularities fall under criminal law, FINMA may file a complaint with the competent authorities (Federal Department of Finance, Office of the Attorney General and cantonal prosecutors).
Differences between supervision and enforcement
Enforcement differs fundamentally from ongoing supervision. FINMA’s supervisory activities entail continual interaction with supervised institutions in all key areas and at all hierarchical levels, often by way of informal discussions.
Enforcement, on the other hand, deals with specific topics and only happens when financial market laws have potentially been violated or discrepancies arise. FINMA starts by informally investigating a suspected violation and then initiates formal proceedings where necessary to restore compliance with the law. Supervision continues as normal alongside this process.
Requests to contact FINMA
When FINMA is unable to contact individuals or legal entities by post, it uses the official gazette and this website to call for them to contact FINMA. This is done mainly in connection with international requests for assistance.
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