Switzerland boosts administrative cooperation between international authorities

On 12 September 2025, the Swiss Federal Council adopted the dispatch on amending the Financial Market Supervision Act (FINMASA) and other legislation, including the Federal Act on Audit Oversight and the Swiss National Bank Act (Dispatch).

The proposed legislative amendments to the FINMASA amends the Swiss legal framework to bolster international cooperation in the financial market sector in line with current cross-border requirements. This following article focuses on the key aspects of the revision covered by the FINMASA amendments.

Revision of the administrative assistance procedure

The administrative assistance procedure applied by the Swiss Financial Market Supervisory Authority (FINMA) currently includes a client procedure granting clients the right to be heard and the right of appeal (Client Procedure).

This Client Procedure is exceptional by international standards (only Liechtenstein has a similar level of client involvement). Foreign financial market supervisory authorities argue that the Procedure significantly limits FINMA's ability to provide administrative assistance.

If the current amendments are adopted by the Swiss parliament, clients will no longer be able to benefit from this Client Procedure when a foreign authority requests international administrative assistance on a possible violation of market abuse provisions and the transactions in question impact the foreign financial market. In such cases, clients will lose their right to be heard and appeal, and FINMA will no longer be obliged to inform them afterwards. Insider trading and market manipulation account for 65% of all requests for administrative assistance.

In all other cases, the Client Procedure will continue to apply in its current form (e.g. unauthorised financial intermediation or non-compliance with disclosure requirements under supervisory law).

Cooperation with foreign authorities and the Swiss regulatory framework

Context

According to the Swiss Federal Council, recognition of the Swiss regulatory framework and the corresponding FINMA practice is often essential for Swiss financial service providers to gain access to foreign markets. Based on such recognition (e.g. recognition of equivalence by the European Commission), Swiss financial service providers may be granted authorisation to conduct business abroad or be exempted from regulatory requirements in the country where they operate (e.g. facilitation of EU market access).

Current framework

In the absence of formal legislation, FINMA is not always able to provide the international cooperation necessary for the Swiss regulatory framework to be sufficiently recognised. Current legal provisions only allow for the disclosure of publicly available information on FINMA's supervisory practices, guidelines, and the entities it supervises. The Dispatch notes that FINMA has not been consistently able to provide the information required by foreign authorities to audit its regulatory framework and supervisory practices, particularly information that is not publicly available. Ultimately, this uncertainty surrounding FINMA's legal disclosure options adversely affects the results of such audits.

Condition for cooperation

The revision of the FINMASA establishes a specific legal basis that expressly authorises the transmission of information that is not publicly accessible on the Swiss regulatory framework and FINMA's supervisory practices in the context of recognition and audit procedures of foreign authorities, provided that FINMA deems this information relevant for ensuring the audit.

Covered information

This information covered by this carve-out includes FINMA's internal guidelines and procedures, as well as extracts from its supervisory files. The latter may contain information about regulated entities, such as FINMA's programs and priorities for supervising a particular institution, examples of safeguard assessments for proper conduct, and extracts from supervisory and audit reports.

Direct transmission of information by supervised institutions to foreign financial market supervisory authorities

Current framework

FINMASA currently allows supervised institutions to transmit information, including details of transactions carried out by clients and supervised institutions that are not publicly available to the foreign financial market supervisory authorities to which they are subject and to other foreign supervisory authorities. To transmit information, supervised institutions must meet the conditions for administrative assistance and guarantee the rights of clients and third parties. FINMA retains the option of requesting administrative assistance. FINMASA is supplemented by the FINMA Circular 2017/6 on direct transmission. The ex-post evaluation of the FINMA Circular and general application showed that, in practice, the interpretation of the FINMASA gives rise to legal uncertainty for supervised institutions.

New legal wording to facilitate direct transmission

The revision of FINMASA clarifies the rules on direct transmission. Legal wording has been amended to allow financial institutions to waive, in certain situations, the need for a detailed, case-by-case examination of the conditions of specificity and confidentiality, presuming that these conditions are met. According to the Dispatch, the relevant provision now enshrines a presumption.

Despite this revision and the Dispatch’s explanations, however, direct transmission should remain subject to careful evaluation. The revision does not give financial institutions carte blanche. As a matter of principle, direct transmission of information may only take place if the rights of clients and third parties are guaranteed, and if the supervised institutions can be sure that the conditions relating to administrative assistance provided by FINMA are met, namely confidentiality and specificity. Applying a waiver based on presumption always involves some risk in the absence of clear case-law. Whether this new provision will provide more security and predictability for market participants will depend on market practice and possible amendments to the FINMA Circular.

As of today, FINMA has already published a list of more than 100 foreign financial market supervisory authorities whose supervised institutions can assume that they meet the conditions for receiving administrative assistance from FINMA. Where the foreign supervisory authority or requesting department is not included on this list, compliance with the principles of confidentiality and specialty may, for example, be clarified by the receiving authority or department via confirmation, a local lawyer specialised in financial market law or an internationally active law firm via written information, or a qualified person within the company. Despite these clarifications, implementation of the direct transmission is complicated. Even if the revision of FINMASA is welcomed, practicalities and further amendments will determine the fate of this new framework vis-à-vis direct transmission.

Information provided to FINMA by supervised institutions

Direct transmissions of pertinent information will remain subject to the obligation to report the transmission in advance to FINMA. Pertinent information includes important facts that should be communicated to FINMA even if not transmitted or if the transmission itself will be of interest to FINMA. This broad and unspecific wording may be seen as conceived to encourage supervised institutions to report, particularly in case of doubt.

Mandatory reporting under applicable financial market regulations

According to FINMASA, supervised institutions may transmit information relating to transactions carried out by clients and regulated entities, which is not publicly available and necessary for the execution of these transactions, to supervisory authorities in foreign countries, according to the foreign law.

FINMASA's provisions primarily apply to reports made by foreign trade repository entities in connection with transactions executed for their clients. They do not, however, apply to standardised mass communications made in accordance with legal reporting requirements. Information may also be transmitted in specific cases if the conditions are met (e.g. when reporting entities respond to individual requests for information from foreign authorities concerning specific transactions or clients).

In cases of direct transmission of information by reporting entities under this type of mandatory reporting, compliance with the principles of specificity and confidentiality will not be required. The rights of the clients and third parties concerned must, however, be guaranteed. This exception is objectively justified since the information in question cannot be transmitted by FINMA in the context of administrative assistance proceedings. (It is not transmitted for supervisory purposes). Similarly, there will be no obligation to report to FINMA in advance. Nevertheless, transmitting information to foreign authorities or services for specific tax or criminal prosecution purposes will remain prohibited.

Notification outside the country of origin of documents for the purpose of financial market supervision

The revision of the FINMASA also specifies that FINMA may authorise a foreign financial market supervisory authority to notify (i.e. issue) documents directly to a recipient in Switzerland by post, provided that the notification serves the purpose of financial market supervision and that the requesting authority's country provides reciprocity for Switzerland.

The direct notification, for supervisory purposes, of documents having legal effect for the administration of evidence in foreign investigations or proceedings or for establishing a still undefined state of affairs (e.g. orders to produce documents, requests for statements or testimony, etc.) will remain contrary to the provisions on administrative assistance in Art. 42 ff. This type of action will continue to be subject to a request for administrative assistance from FINMA and may only be carried out on Swiss territory if allowed by the applicable provisions of the FINMA Act.

Audits outside the country of origin

Existing framework

FINMA may conduct direct audits or have them conducted by an audit firm, exclusively in institutions of supervised entities that are located abroad, to ensure compliance with financial market legislation or for the purpose of financial market supervision. Conversely, the current FINMASA allows FINMA to authorise foreign financial market supervisory authorities to carry out direct audits, provided that these authorities are responsible for supervising the supervised institutions audited under home country supervision or are responsible for supervising the activities of the supervised institutions audited on their territory and that the conditions for administrative assistance are met.

Weaknesses of the current framework

From the outset, doubts have remained in cases of outsourcing within or outside a group where the foreign financial market supervisory authority has not formally included the Swiss service provider in its consolidated supervision (i.e. when it is not an authority of the country of origin or home supervisor) and the external service provider is not subject to FINMA supervision. Given the growing number of transfers of activities, tasks and operations to non-regulated companies, both within and outside a group, the current regulation in FINMASA has been considered too limited.

Proposed revision

The revision enables FINMA to request audits to ensure compliance with financial market laws or financial market supervision in countries where the relevant information is located, regardless of whether the audited company is subject to supervision abroad. This revision will also allow FINMA to authorise foreign financial market supervisory authorities to conduct audits in Switzerland of non-regulated service providers, even if the providers in question are not subject to consolidated supervision abroad, provided that the audited service providers are in an outsourcing arrangement with a financial institution subject to supervision abroad. The proposal contains various conditions and limitations that govern these audits outside the country of origin, particularly when a foreign intervention in Switzerland is requested.

Outlook

The Swiss Federal Council noted that the provisions of FINMASA no longer reflect current international requirements for cross-border cooperation. The Swiss authorities believe that maintaining the status quo would significantly undermine the competitiveness of the Swiss financial center on the international stage. The proposed revision pursues this political agenda. If proof were needed, this revision demonstrates Switzerland's growing interconnection with other jurisdictions.

For more information on financial services compliance and regulatory matters in Switzerland, contact your CMS client partner or the CMS expert who wrote this article.