SWITZERLAND Trends and Developments Contributed by: Andrew M. Garbarski, Massimo Chiasera and Louis Frédéric Muskens, Bär & Karrer Ltd
Internal Investigation Reports Introduction
The conflict between these two principles becomes obvious where the information provided to FINMA (i) is incriminating for the supervised entity, and (ii) is subsequently shared by FINMA with the criminal prosecution authorities. Such sharing of information might typically occur in the context of mutual assis - tance proceedings and the exchange of information between authorities. In Switzerland, companies such as banks are largely denied the right to invoke the nemo tenetur principle to prevent the prosecution authorities from getting hold of internal investigation reports, whether this occurs by means of coercive measures (dawn raids, seizures, etc) or through mutual legal assistance with FINMA. The reasoning behind this is that (i) if documents and evidence already existed before coercion was applied, and (ii) they were issued notably in the con - text of administrative proceedings, without the threat of criminal penalties, the nemo tenetur principle does not apply (Swiss Federal Supreme Court [FSC] 142 IV 207). However, this strict stance tends to be sof - tened in more recent FSC decisions (see, in particular, 7B_45/2022 of 21 July 2025, discussed below). As a result of (i) the increasing appetite of prosecution authorities for internal investigation reports, and (ii) the very limited legal protection afforded to supervised entities and their employees, other avenues need to be considered by supervised entities concerning how the findings of internal investigations are documented and eventually shared with FINMA. Attorney-client privilege: what is the scope of privilege protection? While attorney-client privilege remains intact as a matter of Swiss criminal procedure law for lawyers defending the accused individual or a legal entity, the scope of protection is significantly more precarious for other participants (witnesses, informants, etc) or third parties to the proceedings. Indeed, for these other categories, recent case law has held that only Swiss, EU and EFTA-admitted lawyers – to which one should now add UK-admitted lawyers – benefit from attor - ney-client privilege protection in Switzerland (FSC 147 IV 385).
This section outlines the role and relevancy of inter - nal investigation reports in the financial sector and particularly in the context of parallel or subsequent criminal proceedings related to the same underlying matter. This topic has been the subject of significant case law in Switzerland. Against this backdrop, certain limitations apply and need to be carefully considered at the outset of an internal investigation. One of the key questions is whether it is possible to avoid or challenge the prosecution authorities’ reli - ance on an internal investigation report by invoking (i) the right not to incriminate oneself (nemo tenetur principle), and/or (ii) attorney-client privilege, where outside legal counsel was instructed to conduct the internal investigation and issued a report. Right not to incriminate oneself In the financial sector, supervised entities and people within them are subject to a very broad duty to coop - erate with the Swiss Financial Market Supervisory Authority (FINMA), which is responsible for monitoring the Swiss financial market and protecting its integrity. The key provision dealing with the cooperation duty is Article 29 of the Federal Act on the Swiss Financial Market Supervisory Authority. As a result, supervised entities must provide FINMA, on their own initiative or upon request, with all docu - ments and information which the regulator requires to carry out its supervision duties. In practical terms, the disclosure duties vis-à-vis FINMA often require the supervised entity to document its findings yielded dur - ing an internal investigation and to disclose the report (or at least the key findings) arising therefrom, which often identifies potential legal or regulatory shortcom - ings related to the underlying matter. At times, however, the duty to co-operate with the regulator conflicts with the nemo tenetur principle, pursuant to which no person may be required to incriminate themselves by their own testimony, by positively providing evidence or through any other form of active cooperation in criminal proceedings.
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