Disbarment: Individual imputability of a breach of supervisory law

What is impressive about the Federal Supreme Court's ruling(2C_192/2019) is that the General Council, in its function as Head of Compliance, was granted a comprehensive guarantor position with regard to compliance with money laundering regulations. Internal organisational deficiencies are not exempt from compliance with money laundering regulations or from reporting to the Money Laundering Reporting Office Switzerland (MROS).

Prehistory

FINMA imposed the two-year ban on the General Council because it considered it to be in breach of its obligations with regard to compliance with the Anti-Money Laundering Act (AMLA). The background to this was the failure to report to MROS, which should have been carried out on the basis of the unsubstantiated transactions known to both the General Council and the bank's management in connection with the 1MBD debacle. The General Council filed an appeal against the order with the Federal Administrative Court and requested its annulment.

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Legal considerations

From a legal point of view, the Federal Administrative Court considered that the General Council, which was sometimes also the head of the Legal & Compliance Department, should have at least suggested to the management that a report be made to MROS. By not making the report or the proposal, the General Council had contributed to a serious violation of Art. 9 para. 1 lit. a no. 2 AMLA. With regard to the prohibition imposed within the meaning of Art. 33 FINMASA, the Federal Administrative Court was of the opinion that the contributory negligence of the General Council had to be taken into account in order to reduce culpability. Based on this, the Federal Administrative Court considered the fault of the General Council to be slight contributory negligence and found the professional ban imposed to be unreasonable.

The Federal Supreme Court disagreed with regard to the culpability component and considered that the General Council had a guarantor position within the meaning of Articles 6 and 9 AMLA due to its extensive possibilities to influence the management. Under the aspect of proportionality, his cooperative behaviour as well as the fact that the General Council was put under pressure and even deceived by his superiors had to be viewed positively. However, such organisational deficiencies cannot eliminate the individual imputability of a breach of supervisory law. The Federal Supreme Court upheld the appeal and confirmed the two-year ban on the General Council.

"With this ruling, the Federal Supreme Court has clearly pointed the way for functions with far-reaching decision-making powers to be held accountable regardless of the organizational structure"
- RA Rebecca Isenegger

Insightful argumentation

The Federal Supreme Court's reasoning makes sense and is to be welcomed. If persons with functions that are not organisationally integrated into the operational or strategic management of the company could escape accountability precisely because of this circumstance, this would give all the more reason to create organisational deficiencies. With this ruling, the Federal Supreme Court has clearly pointed the way for functions with far-reaching decision-making powers to be held accountable irrespective of the organisational structure.


This article was written by Rebecca Isenegger, lawyer.

Hans Kuhn will be happy to answer any questions you may have regarding supervisory law.