Switzerland: Financial Sector Assessment Program-Detailed Assessment of Observance—Basel Core Principles for Effective Banking Supervision

International Monetary Fund

No 2025/295, IMF Staff Country Reports from International Monetary Fund

Abstract: This paper presents Detailed Assessment of Observance report for Basel Core Principles for Effective Banking Supervision in Switzerland. The assessment of Switzerland's banking supervisory framework reveals significant legal gaps that hinder the Swiss Financial Market Supervisory Authority's (FINMA) ability to deliver robust, effective oversight. A core challenge is the limitation in FINMA's early intervention capabilities and the enforceability of supervisory actions, which are fundamental to international standards. Although FINMA possesses formal powers to act against individuals, the high evidentiary threshold for attributing individual responsibility restricts their practical use. To improve compliance, supervisors must communicate explicit expectations through detailed guidelines and regulations, addressing the current "silent approach" to risk articulation. Critically, the current system relies heavily on regulatory audits, which are not a substitute for direct supervisory onsite work. The mission strongly recommends granting FINMA the power to mandate and direct the scope of regulatory audit work to enhance supervisory effectiveness.

Keywords: Union bank; terrorist financing; Basel core; liquidity ordinance; credit Suisse; Auditing; Anti-money laundering and combating the financing of terrorism (AML/CFT); Market risk; Liquidity; Internal audit; Global (search for similar items in EconPapers)
Pages: 284
Date: 2025-11-13
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