Insights

The importance of operational risk management for financial institutions continues to grow. On June 12, 2024, FINMA published Guidance 04/2024 on the management of operational risks of fund management companies and managers of collective assets. This communication underlines the regulator's efforts to strengthen risk management among all supervised financial market participants and presents possible measures for the institutions concerned. Our article summarizes the key measures and highlights their potential impact on financial institutions that are not directly covered by the supervisory communication.

The number of successful cyber attacks has been increasing for years. Cyber attacks are therefore one of the main risks for FINMA-supervised institutions. The new FINMA Guidance 03/2024 now describes specific requirements for dealing with cyber risks and answers common questions about reporting obligations. Although it is aimed at larger and more highly regulated institutions such as banks, the principles are also applicable as a guidance to smaller and medium-sized portfolio managers (Art. 17 of the Financial Institutions Act [FinIA]). In particular, the boards of directors of the institutions must also be prepared.

An indirect partial liquidation clause is standard in share purchase agreements. However, buyers are well-advised to carefully plan the acquisition of a Swiss target company as well as the subsequent integration and prepare together with sellers a defensive argumentation to disprove application of the indirect partial liquidation theory.

The Swiss federal supreme court recently confirmed the long-standing practice that hidden profit distributions are committed by submitting incorrect annual financial statements to the Swiss federal tax authorities.

At the end of May 2024, the Federal Council submitted the dispatch on the further development of the fight against money laundering to Parliament. The main objectives of the bill are the introduction of a transparency register for legal entities and the introduction of AML due diligence obligations for lawyers and advisors. The proposed legislation represents a significant adjustment to meet the increasing international requirements for combating money laundering and terrorist financing.

This article informs you about the recently published draft of the new FINMA circular on the duties of conduct under the FinSA (Financial Services Act). On the one hand, this circular represents an important step towards further clarifying the existing regulations and facilitating their practical implementation; on the other hand, its implementation will lead to a need for adaptation on the part of most financial service providers. The Swiss Financial Market Supervisory Authority (FINMA) is ultimately aiming to increase legal certainty for financial service providers and improve investor protection.

There are currently interesting developments in Anti-money laundering legislation in the European Union (EU). The crypto sector and dealers of luxury goods such as cars, works of art, yachts, jewellery, etc. will be affected heavily by the future regulations. Professional football clubs and agents are also expected to be affected. In addition, an EU-wide upper limit for cash payments of a maximum of EUR 10,000 and a new EU authority to combat money laundering are to be created. This article outlines the most important changes at EU level, which could also have an impact on Swiss Anti-money laundering legislation in the medium term.

What asset managers of collective assets need to know about the new regulations.

Various amendments to the Collective Investment Schemes Ordinance (CISO) came into force on 1 March 2024. Most of the changes relate to the introduction of the new L-QIF, which we have already reported on separately. However, other significant amendments to the CISO have also been made. These also apply to existing institutions that do not manage L-QIFs and affect various aspects such as the management of liquidity risks.

Advancing digitalisation has led to companies increasingly moving applications to the cloud, which entails risks. Auditing a cloud-based IT environment is a specialised task that requires technical knowledge and experience.

The Swiss federal supreme court has ruled that taxpayers must decide whether they wish to claim the CHF 10m Swiss stamp tax exemption threshold or creation of qualified capital contribution reserves. The CHF 10m Swiss stamp tax exemption can only be claimed, if contributions/financial restructuring income are offset against losses that must be proven by a timely booking entry.

Receivables and liabilities involving related parties must comply with the arm’s length principle according to tax law. If these are inadequately interest-bearing, a taxable adjustment of interest income or a reduction of interest expense is made for the amount of the difference to an arm’s length interest rate. On February 26, 2024, the tax administration published the new tax-recognized interest rates (so-called safe-harbor rates) for 2024. While the previous year saw significant increases in interest rates, the adjustments for 2024 were more moderate. For Swiss francs and other currencies, there were even the first reductions in rates.

The legal basis for the Limited Qualified Investor Fund (L-QIF) came into force on 1 March 2024 with the amendments to the Collective Investment Schemes Act (CISA) and the Collective Investment Schemes Ordinance (CISO). Based on the Luxembourg RAIF, this is intended to introduce a more flexible fund in Switzerland, as it already exists in various forms in EU countries. The aim is to strengthen the Swiss fund centre and make it more competitive.

As you know, new VAT rates have been in force since January 1, 2024. These are: standard VAT rate 8.1 % (previously 7.7 %), reduced rate 2.6 % (previously 2.5 %) and special rate for accommodation services 3.8 % (previously 3.7 %) as well as various changes under the net tax rate and lump-sum tax rate regime. In many cases, a VAT rate change is unproblematic and is implemented to the extent that the VAT rates on the invoices are adjusted. However, there are also constellations that are not quite so easy to handle and have different accounting and contractual effects depending on the specific case.

In December 2023, the Federal Council decided to introduce the OECD/G20 minimum taxation as of January 1, 2024 and will levy a top-up tax in Switzerland.

The Federal Council is proposing various measures on how the Anti-Money Laundering Act (AMLA) should be amended in future. It will submit the dispatch with detailed explanations to Parliament in 2024. This article provides you with an overview of the new draft legislation.