7 Good Corporate Governance
Due to their great importance to the economy, banks in Switzerland require a licence and are subject to extensive legal and supervisory regulations. The objective of these regulations is to protect bank clients and the stability of the entire banking and financial system.
The legal basis for SZKB’s activities is the Federal Act on Banks and Savings Banks and the Schwyzer Kantonalbank Act. The general business practices of every bank in Switzerland are also governed by a large number of laws, regulations of the Financial Market Supervisory Authority FINMA and voluntary regulations of the Swiss Bankers Association (SBA). These regulations include requirements in the areas of corruption (including money laundering),competitive conduct, and insider trading.
Legitimate and fair business practices are of great importance to SZKB because failure to comply with them can lead to reputational harm, sanctions (such as fines, claims for damages or liability claims), reduced market share and economic losses for the Canton of Schwyz.
Legal and fair business practices form the basis of every SZKB activity. SZKB is committed to strict compliance with national and international legal requirements (including human rights) and principles of professional conduct. In addition, the Bank Council has adopted a Code of Conduct that is binding for all employees of SZKB.
Various levels are responsible for ensuring that SZKB conducts business properly. Active involvement of employees hones their understanding of comprehensive risk management. All business areas are also subject to regular audits as part of the internal control system (ICS). In addition, the internal audit department conducts regular reviews, and external auditing firm PricewaterhouseCoopers (PwC) performs an annual audit of all operational activities.
As in the previous year, neither fines nor non-monetary sanctions were imposed on SZKB in 2022 due to non-compliance with laws and/or regulations (in general, but especially not in the social or economic area).
SZKB’s business operations are based on consistent compliance with the applicable laws and regulations in all business areas and activities. In this context, there are numerous directives and work instructions that all SZKB employees are required to comply with. This is particularly true in the areas of corruption and money laundering, where awareness is raised among all employees annually through internal training and testing. Internal auditing bodies regularly monitor the completion of professional training and continuing education courses, the applicable requirements and compliance with these requirements, with all of this also examined during the external audit.
To assist in the fight against corruption and money laundering, SZKB identifies financial, regulatory and reputational risks by consulting a database in use throughout the world (World-Check) of politically exposed persons as well as persons and organisations with elevated risk. This database is used to verify both transactions and clients. The necessary measures are initiated if a potential link to a critical issue is identified, in particular in connection with money laundering, terrorism, drug trafficking, corruption, arms trafficking or human trafficking. These measures can include a report to the competent authority in accordance with the applicable money laundering or embargo legislation.
Local media, local notices and reports from the police and state judicial bodies are also drawn upon to identify the above-mentioned risks among the primarily local clientèle.
All SZKB employees attend annual training courses on topics relating to regulation and good corporate governance as well as their ethical implications.
In the reporting year, the Money Laundering Reporting Office Switzerland (MROS) at the Federal Office of Police (fedpol) was notified of isolated cases of suspected money laundering within the meaning of the Money Laundering Act. One of the cases was referred to the public prosecutor’s office. In the remaining cases, the suspicion was not further substantiated. SZKB is not aware of any incidents of corruption in the reporting year 2022.
SZKB does not aid or abet tax evasion.
In its General Terms and Conditions, SZKB clearly states that the client is responsible for complying with domestic and foreign legal provisions. In particular, this concerns declaration and reporting obligations under tax, foreign exchange, stock exchange and corporate law.
SZKB holds the FATCA status «Registered Deemed Compliant FFI – Local FFI» and systematically implements the restrictive FATCA rules that apply to it.
SZKB does not provide any tax advisory services. The clients are evaluated with regard to the existence of qualified tax offences, and the tax compliance information they provide is checked.
In the reporting year, it was not necessary to submit any reports or take any measures regarding untaxed client assets.
It is in the interest of SZKB and its employees that conflicts of interest are avoided and that legal regulations and ethical principles are consistently observed. To ensure that this is the case, the Bank Council has issued a policy for dealing with conflicts of interest. This policy defines possible conflicts of interest, describes situations in which conflicts of interest could arise and explains in detail how to deal with such situations. Compliance with market conduct rules is among the described areas in which conflicts of interest can arise. In 2022, it was necessary for all employees to disclose their external custody relationships and to confirm that they have taken note of and comply with the relevant legal requirements and internal policy. Potential insider trading must be proactively reported to the Chief Compliance Officer (CCO) without delay. The CCO did not have to take any necessary measures in regard to insider trading in the reporting year.
All SZKB employees are prohibited from engaging in any activity in the interest of a competing institution. Employees may not be members of a court in the Canton, of the Cantonal tax commission, of other authorities of the Canton or of a district or municipality entrusted with the examination of tax documents.
SZKB does not accept employees engaging in illegal conduct or violating internal policies. It is often possible to find out about problems only if employees provide relevant tips. For this reason, SZKB calls on employees to address any internal misconduct directly or, if no solution can be found, to report it to the relevant line manager. For situations in which these two options are inexpedient or impossible to pursue, SZKB has implemented a reporting system that follows a cascading order:
- Point of contact: Chief Compliance Officer (CCO)
- Point of contact: Head of the Inspectorate
- Point of contact: Chair of the Audit Committee
- Point of contact: Chair of the Cantonal Council’s Supervisory Commission for the Schwyzer Kantonalbank (KRAK)
Unless there is a legal obligation to disclose information, corresponding reports will be treated confidentially. Provided that reports are made in good faith, SZKB will protect employees who report wrongdoing from any sanctions in
response to the report.No whistleblowing reports were submitted in reporting year 2022.
SZKB refrains from exerting political influence. In 2022, SZKB supported all parties represented in the Cantonal Council of Schwyz with a lump sum of CHF 5,000 without any claim to service in return. SZKB otherwise did not make any contributions to political parties or individual politicians in 2022. SZKB is neutral in regard to politics and religion and does not take any political positions. The Swiss Bankers Association (SBA) and the Association of Swiss Cantonal Banks (ASCB) represent the interests of the Cantonal banks and the financial centre with political consultations or initiatives, for example. SZKB is a member of both organisations.
To ensure that SZKB continues to meet all regulatory requirements in future, SZKB uses a regulatory radar scheme to proactively monitor current developments.