Federal Council issues preliminary draft of new Administrative Criminal Law Act
On 31 January 2024, the Swiss Federal Council suggested a total revision of the Administrative Criminal Law Act of 22 March 1974 (ACLA) and issued a preliminary draft including an explanatory report.
According to the Federal Council's explanatory report, the total revision of the ACLA will strengthen the rights of the accused. In addition, the ACLA’s procedural rules will be more efficient and modern by aligning with ordinary criminal procedural law as set out in the Swiss Criminal Procedure Code (CrimPC). The provisions of the ACLA, however, will not be incorporated into CrimPC or the Swiss Criminal Code.
At the same time, the administrative authorities will be equipped with procedural instruments similar to the one available to the ordinary criminal prosecution authorities (e.g. same compulsory measures as under CrimPC).
Administrative Criminal Law Act of 22 March 1974
Most provisions of the ACLA are procedural, and deal with the enforcement of criminal provisions in administrative federal law. One of the main characteristics of the ACLA is that investigations are led by a federal administrative unit and not by the public prosecution's office. This decision is based on the lawmaker's assumption that administrative units have better knowledge of specific federal administrative laws and are better equipped to conduct criminal investigations in administrative law cases.
In addition to the procedural provisions, the ACLA contains specific criminal provisions that mainly relate to fraud offences in connection with federal subsidies (Art. 14-18 ACLA; see also Art. 37 et seqq. of the Federal Act on Subsidies of 5 October 1990).
However, most of the criminal provisions enforced through the application of the ACLA are found in various separate federal administrative acts, such as the following financial market laws:
- Anti-Money Laundering Act of 10 October 1997 (AMLA):
Violation of the duty to report suspicious activity regarding money laundering to the Money Laundering Reporting Office Switzerland (MROS) (Art. 37 AMLA).
Violation of the dealer's duty to appoint an audit firm (Art. 38 AMLA).
- Financial Market Supervision Act of 22 June 2007:
Carrying out an activity without required authorisation, recognition, licence, registration or affiliation with a self-regulatory organisation (Art. 44 FINMASA).
Giving false information to FINMA, an audit company, a supervisory organisation, a self-regulatory organisation or an appointed investigative agent (Art. 45 FINMASA).
Violating obligations by appointed agents (Art. 46 FINMASA).
Failing to have annual financial statements audited as required by the financial market acts by a licensed audit company or to have an audit carried out that has been ordered by FINMA or a supervisory organisation or failure to fulfil obligations vis-à-vis the audit company or the appointed investigative agent (Art. 47 FINMASA).
Non-compliance with rulings issued by FINMA (Art. 48 FINMASA).
Other provisions of administrative criminal law are found in the following federal administrative acts:
- Federal Act on the Implementation of the FATCA Agreement between Switzerland and the US of 27 September 2013 (Art. 18 et seqq).
- Federal Act on the international automatic exchange of country reports of multinational groups of companies of 16 June 2017 (Art. 25 et seqq.).
- Therapeutic Products Act of 15 December 2000 (Art. 86 et seq.).
- Various tax laws, such as the Customs Act of 18 March 2005 (Art. 117 et seqq.); Value Added Tax Act of 12 June 2009 (Art. 96 et seqq.); or Withholding Tax Act of 13 October 1965 (Art. 62 et seqq.).
Administrative criminal procedure
Administrative criminal procedure differs from the ordinary criminal procedure of CrimPC. The main aspects of the ACLA’s administrative criminal procedure are as follows:
- As already mentioned, administrative criminal investigations are not conducted by a prosecutor's office, but by an administrative unit of the federal administration (Art. 20 al. 1 ACLA). For instance, the Federal Department of Finance investigates criminal offences against the financial market laws for which the ACLA is applicable.
- In cases related to business operation, if a fine of up to CHF 5000 is sufficient for the offence committed, and if the investigation of the responsible natural persons require measures disproportionate to the sanction, the administrative unit may refrain from prosecuting the natural persons and impose a fine on the company involved (Art. 7 ACLA).
- The administrative unit’s decisions and procedural acts must be challenged within a non-extendable period of three days by submitting a written appeal (Art. 28 al. 3 ACLA).
- The first instance of appeal against the administrative unit’s procedural decisions is not a court, but the director of the administrative unit conducting the investigation (Art. 27 al. 1 ACLA). A court is the second instance of appeal, namely the Lower Appeals Chamber of the Federal Criminal Court. This instance can only by invoked by a violation of federal law, but not on the grounds of an incomplete or incorrect assessment of the facts (Art. 27 al. 3 ACLA). In sum, the appeal procedure against procedural decisions is questionable from a constitutional point of view.
- If the investigating officer of the administrative unit considers the investigation completed and finds that a criminal offence was committed, he draws up a final protocol, which is a report on the results of the criminal investigation and its legal consequences (Art. 61 al. 1 ACLA). Once the final protocol has been notified, the accused may make a statement on it, inspect the case file and request that further evidence be taken (Art. 61 al. 3 ACLA). There is, however, no right of appeal against the final protocol and, at this stage of the proceedings, against the refusal of the administrative unit to take further evidence (Art. 61 al. 4 ACLA).
- Depending on the results of the criminal investigation, the administrative unit will discontinue the proceedings, issue a penalty order if a fine or a monetary penalty is sufficient (Art. 62 al. 1 ACLA), or refer the case to the court if the prerequisites for a custodial sentence, a custodial measure or an expulsion from Switzerland is fulfilled (Art. 21 al. 1 ACLA).
- The accused may reject the penalty order within 30 days of its notification. Otherwise, it becomes legally binding (Art. 67 ACLA). The rejection must be motivated (Art. 68 al. 1 and 2 ACLA). With the rejection, the accused may also criticise the administrative unit's failure to take further evidence (Art. 61 al. 4 ACLA).
- If the accused files a rejection, the administrative unit reviews the penalty order. It may summon an oral hearing and complement the criminal investigation, especially based on the request of the accused for taking of further evidence (Art. 69 al. 1 ACLA). Afterward, the administrative unit may either close the investigation or issue a penalty decision, which must not increase the penalty (Art. 70 al. 1 ACLA).
- Within ten days of notification of the penalty decision, the accused may request that the matter be brought before a court (Art. 72 al. 1 and 2 ACLA). This right guarantees the accused's access to a judicial review. The case can be also brought to court directly after the notification of the penalty order since, at the request or consent of the accused, the administrative unit can treat a rejection of the penalty order as a request for judgment by the criminal court (Art. 71 ACLA).
- In case of court proceedings, the administrative unit must involve either the federal prosecution office or a cantonal prosecution office by transferring the case file to them. The prosecution office then submits the case file to the competent court (Art. 73 al. 1 ACLA). The involvement of the public prosecution office is a cumbersome and unnecessary procedure since the public prosecutor is usually not involved in the charges brought before the court.
- The accused may withdraw the request for a court decision as long as the court has not issued its judgment. In this case, the penalty decision becomes legally binding. Similarly, the administrative unit may withdraw its penalty decision with the consent of the Office of the Attorney General of Switzerland as long as the court has not issued its judgment. The withdrawal of the penalty decision will lead to the proceeding’s abandonment (Art. 78 ACLA).
Preliminary draft of the Federal Council
In summary, the Federal Council's preliminary draft does not bring any significant conceptual changes in administrative criminal law procedure. The emphasis lies on the adaptation to the developments of CrimPC and its case-law while preserving the special features of administrative criminal proceedings. The Federal Council rejects the ideas of integrating the administrative criminal proceedings into CrimPC and of transferring the authority to investigate in administrative criminal law matters to public prosecution offices.
The Federal Council's main argument for maintaining the status quo is that administrative law (e.g. financial market law and regulations; tax law, provisions regarding authorisation and distribution of therapeutic products) require specific knowledge that public prosecution offices do not have. The Federal Council is still of the opinion that administrative units are better equipped to enforce administrative criminal law because of their knowledge of their respective fields and that the particularities of administrative criminal law require a separate criminal procedure.
The adaptations to CrimPC refer in particular to the compulsory measures of the investigation. Under the current ACLA (cf. Art. 45-60 ACLA) the compulsory measures are regulated more rudimentarily than those under CrimPC (cf. Art. 196-298 CrimPC), and the administrative units can apply fewer compulsory measures than the public prosecutors under CrimPC because only seizures, searches and arrests are allowed under ACLA (cf. Art. 45 et seqq. ACLA). Unlike under CrimPC, the ACLA does not provide for covert surveillance measures (cf. Art. 269 et seqq. CrimPC). Only a few administrative laws, such as the Therapeutic Products Act, give the administrative unit the power to apply covert surveillance measures (Art. 90a Therapeutic Products Act of 15 December 2000). According to the preliminary draft, however, administrative units have the same competence to apply covert surveillance measures as do public prosecutors under CrimPC (Art. 218 et seqq. of the preliminary draft).
In the appeal procedure described above against decisions and procedural acts of the administrative unit, the preliminary draft provides for a time limit of ten days (instead of three days according to the current provision of Art. 28 al. 3 ACLA) to file an appeal (Art. 49 al. 3 of the preliminary draft). In addition, the second instance of appeal, the Lower Appeals Chamber of the Federal Criminal Court, has the power to review the decision of the first appellate body in full, and not only for violations of federal law as exists under the current law (Art. 49 al. 2 in conjunction with Art. 48 al. 4 of the preliminary draft).
Furthermore, Art. 7 of the preliminary draft levies a fine of up to CHF 50,000 (currently, the fine is up to CHF 5000) may be imposed on a company regardless of its fault if a natural person has committed an administrative offence in the course of managing the company’s affairs and the investigative measures required to identify this person would be disproportionate to the seriousness of the offence (in the current Art. 7 ACLA, the investigative measures must be disproportionate to the penalty).
Outlook
The Federal Council has presented a preliminary draft for a total revision of the ACLA. While it is undisputed that the procedure for administrative criminal law needs to be revised, the preliminary draft only seeks to adapt the ACLA to developments in CrimPC while preserving its particularities. The preliminary draft retains the concept of a separate procedure for administrative criminal law with administrative units conducting the investigation.
It is, however, questionable whether a separate procedure for administrative criminal proceedings is still legitimate. After all, administrative criminal offences do not substantially differ from the criminal law provisions of other legislation, the violation of which is investigated in accordance with CrimPC.
The Federal Council's preliminary draft will be in consultation until 10 May 2024. It remains to be seen how interest groups and associations will react to it.
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