FINMA and law enforcement

One of the fundamental tenets of the Financial Market Supervision Act is the separation of preventive supervision and repressive enforcement. If FINMA discovers violations of the law and other irregularities, it corrects them and enforces supervisory law.

Objectives of enforcement

The aim of enforcement is to establish whether a financial market participant – either supervised or unauthorised – has violated supervisory law. FINMA investigates and clarifies the circumstances and, where necessary, conducts formal administrative proceedings. The objective of such enforcement proceedings is to restore compliance with the law.

Enforcement tools

Once the enforcement proceedings are concluded, a ruling is issued: profits may be confiscated, professional restrictions imposed or organisational amendments required to ensure that the same error is not repeated. In extreme cases, proceedings may lead to revocation of a licence or liquidation of a company.

Recourse against FINMA rulings

Rulings issued by FINMA may be challenged and may thus be subject to judicial review. In contentious cases, the Federal Administrative Court or the Federal Supreme Court has the final say. If FINMA has reasonable grounds for suspecting an offence, it may file criminal complaints with the Legal Service of the Federal Department of Finance.

FINMA’s role in enforcement

What FINMA does

• FINMA ensures that compliance with the law is restored, if supervisory requirements are violated.

• FINMA imposes measures ranging from establishing a violation of the law to revocation of a licence or liquidation of the respective company.

• FINMA may also issue an industry ban and confiscate profits generated illegally.

• FINMA files complaints with the criminal authorities, if it has knowledge of a crime, offence or infringement of financial market legislation.

• FINMA conducts restructuring proceedings.

• FINMA ensures the orderly exit of a company by means of bankruptcy.

• FINMA initiates proceedings, if holdings in companies listed in Switzerland are not correctly disclosed.

• FINMA takes action against market abuses such as inadmissible use of insider information.

• FINMA takes action against financial intermediaries operating without authorisation.

What FINMA does not do

• FINMA does not conduct criminal proceedings and does not impose penalties.

• FINMA is not responsible for civil disputes.

• FINMA has no authority to impose fines.

• FINMA may not order any coercive measures, such as searches of premises or seizure of evidence, during the course of its investigations.

• FINMA does not actively search for institutions operating without authorisation, but it does intervene if it has real evidence of unauthorised activity.

• FINMA may only take action against organisational units domiciled in Switzerland, if a foreign institution operates in Switzerland via a branch or subsidiary. No measures may be taken against the foreign parent company.