Proper business conduct requirements, watch list and business conduct letters

Members of a supervised institution’s ultimate management are subject to requirements under financial market law concerning proper business conduct. FINMA keeps a database containing information that may be relevant in assessing a certain individual’s compliance with these requirements.
Members of a supervised institution’s ultimate management are subject to requirements under financial market law concerning proper business conduct. These are intended to preserve the general public’s trust in supervised institutions and the financial sector’s reputation.

Watch list

FINMA’s supervisory activities regularly yield information about individuals whose business conduct is questionable or does not meet the legal requirements. It can enter this in a database known as the watch list, the aim being to make sure that only people who meet the proper business conduct requirements are involved in the strategic or executive management of authorised institutions or hold qualified participations in them.

The watch list only contains information that is relevant in assessing compliance with the requirements, e.g. personal details; extracts from commercial, debt enforcement and bankruptcy registers; criminal, civil and administrative court decisions; and reports by auditors and third parties appointed by FINMA. The legal basis for the watch list is Article 23 para. 1 FINMASA and the FINMA Ordinance on Data Processing.

Business conduct letter

FINMA additionally sends a business conduct letter to those entered in the watch list when:

  •  there is a possibility of the recipient assuming a position subject to business conduct requirements in the future;
  • it believes that the information it has received, which has not yet been reviewed and is in most cases incomplete, may be serious enough to cast doubt on the person’s compliance; and
  •  it deems it appropriate to inform the person concerned expressly.

A business conduct letter is not a ruling. It simply states that FINMA reserves the right to review compliance with the requirements if the person in question intends to assume a specific position that is subject to them.

This review is carried out by means of enforcement proceedings. If FINMA decides that someone does not meet the requirements, they have the right to a contestable ruling. In principle, FINMA does not carry out abstract reviews of compliance for individuals who do not work for an authorised institution.