SWITZERLAND Trends and Developments Contributed by: Jean-Marc Carnicé, Canonica Valticos Carnicé & Associés
Who bears the duty? Decision of the Swiss Federal Supreme Court of 5 December 2023 (6B_1176/2022 and 6B_1198/2022) This case concerned two senior executives at a Swiss bank: “A” , the former CEO and later chair of the board of directors, and “B” , the head of compliance. Both were accused of violating the duty to report under Article 37 AMLA in connec - tion with a high-risk client, a politically exposed person (PEP) involved in sensitive sectors such as defence, energy, and construction. The client had been flagged as high-risk from the outset, with numerous risk assessments conducted over time. Serious red flags emerged, including the collapse of a foreign bank he co- founded, an ongoing criminal proceeding in Rus - sia for suspected fraudulent bankruptcy, and the initiation of a Swiss criminal case by the Geneva Public Prosecutor. Despite these elements, the bank failed to file a report with the MROS. “B” was ultimately convicted for intentional failure to report, with the Federal Supreme Court confirming that the accumulation of red flags constituted a founded suspicion that should have triggered a report with the MROS. As for “A” , who had previously managed the cli - ent relationship as CEO, the Federal Supreme Court first considered that – as chair of the board of directors “A” was no longer directly respon - sible for reporting to the MROS. However, the Federal Supreme Court examined whether “A” could still be held liable, given that he occupied a position of hierarchical superiority, within the meaning of Article 716a (1) (5) of the Swiss Code of Obligations. On this point, the court conclud - ed that although the control and supervision obligations of the board of directors are limit - ed by the principle of trust, this did not relieve
“A” of criminal liability in this case, despite him being prohibited from participating in the con - crete decision-making process concerning an announcement to the MROS. Indeed, such an injunction did not prevent “A” from exercising supreme control over the decision to make such a report. However, the Federal Supreme Court deter - mined that it was not possible to infer from the contested judgment that “A” had been aware of the relevant information to assess whether a report had to be made. Therefore, the Federal Supreme Court concluded that the facts neces - sary for the application of federal law were not established and referred the case to the lower court to determine whether “A” , in his capacity as chair of the board of directors, had knowl - edge of new information that should have inten - sified the old suspicions already present and led to an announcement to the MROS or, at the very least, additional explanations to the competent departments of the bank. This case highlights that the duty to report is not limited to front-line compliance staff – sen - ior leadership and board members may also be held liable, especially when there is continuity in client knowledge. The decision of the Federal Supreme Court places a heavy burden on for - mer executives, who may no longer have control over day-to-day operations, and raises concerns about the practicality of holding individuals liable for risks that emerge long after their departure from executive positions. What triggers the duty? Decision of the Criminal Chamber of the Federal Criminal Court of 15 November 2023 (SK.2022.47) In this case, the Criminal Chamber of the Fed - eral Criminal Court confirmed the conviction of a bank compliance officer for breaching the
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