Chronology 2016-2017

Events

April 2016

44th Ordinary General Assembly: Why Switzerland? The Assembly stands under the motto Why Switzerland, inviting participants to reflect on the strengths and the uniqueness of this country. The guest speaker, Peter Grünenfelder, insists on stability as a key factor of strength: subsidiarity and direct democracy lead to competition among constituent entities as well as limitation of state activity. This structure also contributes to financial stability and predictability through means such as the debt break. He mentions the liberal labour law and the dual education system as two more assets of the Swiss economy. The Chairman confirms that consolidation among banks in Switzerland is not a recent trend and that, despite strong international pressure, Switzerland remains the number one for global wealth management. Three foreign banks present themselves and the reasons why they are in Switzerland: they insist on factors such as the liberal labour market, high penetration of internet, well-functioning public infrastructure, stability. Peter Grünenfelder, AvenirSuisse. Geoffroy Bazin, BNP Paribas (Suisse) SA; Paolo Moscovici, J.P. Morgan (Suisse) SA; Fouad Bajjali, IG Bank S.A.

May 2016

AFBS Conference: MiFID FIDLEG PRIIPS UCITS AIFMD FINIG While Switzerland is slowly moving towards the drafting of its own legislation on financial services and financial institutes the EU works on implementing its update of the Markets in Financial Instruments Directive MiFID II and related regulation on product disclosure, collective investment schemes, and alternative fund managers. Even though subject to Swiss regulation, financial intermediaries in Switzerland need to assess and comply with the EU standards as soon as they are servicing EU clients / consumers. The presentations allow the audience to gain a sight of what they have to expect; the UK Retail Distribution Review serves as an example on what complexity such regulation can impose upon financial intermediaries. Martina Cocciolillo, Assogestioni, Milan; Eric Dérobert, CACEIS, Paris; Peter Grimmett, M&G, London; Yvonne Lenoir, BRP SA, Geneva and Zürich.

AFBS Roundtable: Tax Regularisation in Brazil Following up on the AFBS Conference presenting the tax regularisation programme in Brazil, banks meet to discuss its implementation and the way in which to accompany clients wanting to take advantage of the scheme. Taxpayers have the possibility to regularise their assets as of 31.12.2014 by self-declaration to be filed before 31.10.2016. Penalty due is of 30% of assets declared. The regulation leaves several questions open, one of several reason why clients are reluctant to adhere to the programme. AFBS Secretariat and representatives of member banks.

AFBS Roundtable: Renminbi Hub Switzerland: Meet the Main Player The event allows banks to gain insight into the functioning of the RMB Hub Switzerland and the opportunities it offers them in the realms of wealth management, corporate banking and other activities. The CCB established a presence in Switzerland in order to assist Swiss banks and corporations to gain simpler access to the Chinese market. In the AFBS Roundtable the bank presented the functioning of RMB Clearing and the programme to invest directly in the Shanghai bond market; participants had the possibility to ask questions and discuss further business opportunities. AFBS Secretariat with representatives of CCB and of member banks.

AFBS Conference: FINTECH applied: Video on-boarding and letter of credits in trade finance With the adoption of its Circular 2016/7 Video and On-Line Identification the FINMA offers financial intermediaries the possibility of opening account relations without physical presence of the client. As a novelty for private banking, the system is approved by the FINMA since 2014 for trade financing operations, covering identification as well as monitoring of the ongoing transaction. The firm offering such a platform presents it to foreign banks, explains advantages and discusses challenges of video on-boarding in the realm of international private wealth management. Beyond the step-by-step process, the event also allows discussing secure information transmission and document storage. Marcel F. Komminoth, Roland Rüttimann, CB Financial Services Ltd.

AFBS Roundtable: FINFRAG and EMIR: Swiss implementation Foreign banks meet in regular intervals to discuss the challenges arising from the implementation in parallel of EMIR for EU business and its Swiss equivalent, the Financial Infrastructure Law FINFRAG. There are questions on both sides: Swiss and EU regulation require collection of certain data, but upon distinct criteria and by imposing different deadlines. Also the recognition of infrastructure providers such as the trade repository and central counterparties and their operability as well as the unilateral extension of deadlines pose additional challenges. AFBS Secretariat and representatives of member banks.

June 2016

AFBS Conference: Trust, Structures, Active and Passive NFEs and Reporting Requirements Based upon a first draft of the Swiss guidelines for the implementation of the Automatic Information Exchange AIE, the speaker – who participates for the foreign banks and the trust industry in drafting the guidelines – outlines the duties and challenges such entities will face. Beyond mere regulatory duties, the speaker also discussed with participants the risks and opportunities which may arise for a bank which offers its clients the possibility to set up such entities. Konrad Häuptli, member of the expert group CRS Guidelines

AFBS Conference: Iran After Suspended Sanctions? Speakers present the new situation after adoption of the Joint Comprehensive Plan of Action JCPOA, which aims at abolishing sanctions against Iran step by step. Relations with Iran are complex because there are different sanctions regimes in place by the USA, the EU, the UN and others. Furthermore, the USA consider the US-nexus, under which even a transaction with remote relation to the USA can fall under the sanctions regime. Discussions focus on the possibilities for banks in Switzerland to offer trade finance services to Iran, Iranian persons and Iranian banks. Edward Krauland, Partner, Washington D.C. and Guy Soussan, Partner, Brussels, Steptoe & Johnson LLP

August 2016

AFBS Roundtable: FINMA draft Circular Transmission of Non-Public Information The FINMA issued for comments the draft Circular which implements Art 42c Par 1-4 of the Financial Market Supervisory Law. The Circular clarifies under what conditions non-public information can be transmitted to foreign authorities without infringement of Swiss law. It lists the instances when a FINMA approval continues to be required. Banks estimate that the Circular does not provide much clarification and that the hot topics remain pending. Banks prefer using the formal channel of administrative assistance, which provides more certainty; direct transmission would be of interest if it was governed by clear and unequivocal rules, which is not the case at present. Furthermore foreign banks are concerned by the indirect transmission of information, which may occur when the foreign parent collects information upon demand of its supervisor. AFBS Secretariat and representatives of member banks.

AFBS Roundtable: Tax Regularisation Programmes The foreign banks meet to discuss implementation of tax regularisation programmes in various non-EU countries. Data protection and protection of physical integrity of the citizens are often cited as reason why persons are reluctant vis-à-vis the automatic information exchange. Alternatives such as transfer of assets to the USA may offer an intermediate, but short term, relief. Banks agree that their clients, wherever they are domiciled, need to get ready for fiscal transparency and position themselves accordingly. AFBS Secretariat and representatives of member banks.

AFBS Conference: From QI Audit to QI Periodic Review and Certification With the alignment of the QI to the FATCA programme, the QI Responsible Officer, in charge of compliance, has been created. By 1 July 2018 he will have to certify compliance. Speakers offer insight into the reasons for the change, the major novelties and their impact onto Swiss financial intermediaries. They outline requirements with respect to client documentation and processes and procedures and give hints on how to best make sure to be ready on time and not to have to disclose events of default or material failures during the programme review. David Violi, Head Regulatory&Compliance Western Switzerland and Thomas Hulmann, Manager, BDO SA

September 2016

AFBS Conference: The QI/FATCA Compliance Review – how to be prepared Following up on the August conference on the modalities moving from audit to review, the foreign banks have the opportunity to understand the effective impact these changes have. The speaker discusses the way in which a review process can best be organised and how the required procedures can be planned and organised in advance. He speaks about how to best choose the moment of the review, what to focus the review on and what connection there is between the FATCA and the QI review. Gabriel Larumbe, PEQ GmbH, Zürich

October 2016

AFBS Conference: Luxembourg's new Fund: the RAIF – what about Switzerland? In July 2016 the Luxembourg Parliament adopted legislation governing the establishment of the Reserved Alternative Investment Fund RAIF. Contrary to the other collective investment vehicles, the RAIF is not subject to ongoing supervision but its manager has to be recognised as Alternative Investment Fund Manager. This prevents double-layered supervision and shortens time to market. The speakers outline the legal framework, organisational set up necessary and requirements for its distribution in the EU and in Switzerland – by a Swiss asset manager. David Louis, Charles Russel Speechlys, Luxembourg; Timothé Fuchs, Fuchs Asset Management, Luxembourg; Yvonne Lenoir, BRP SA, Geneva/Zürich.

AFBS Conference: Transparency and Disclosure:

The trend towards transparency continues unhalted. There is a growing number of realms where transparency becomes standard. This leads to high complexity in financial institutions, which need to manage the various requirements with the regulatory environment, the client-contracts and the internal organisation processes and procedures. The speaker aims at offering a horizontal approach by attempting to discuss solutions open to different disclosure requirements rather than treating each single regulation in its own silo. The ensuing discussion identifies steps towards some streamlining of procedures. Thomas S. Müller, Walder Wyss Attorneys at Law.

November 2016

AFBS Conference: MROS – Reporting: The event allows banks to learn about the practice on extended reporting duties that entered into force on 1 January 2016 with the revised anti-money laundering law. In particular, situations which include fraud and evasion of at least CHF 300,000 need to be reported. Furthermore, the FATF considered Switzerland "largely compliant" in its report published in Summer 2016; nevertheless adjustments remain to be made. The speaker presents his experience and expectations with reporting institutions. He discusses the tightrope between reporting too much and not enough, compares the reporting right and the reporting duty and gives an outlook to future developments. Stiliano Ordolli, Head and Corinne Berger, Deputy Head, Money Laundering Reporting Office MROS

December 2016

AFBS Conference: Recent developments in EU and Swiss data protection rules In the EU, data protection regulation has been adopted and will enter into force in 2018. It will apply with immediate effect, there is no transposition into national law. Switzerland is preparing a revision of its data protection legislation, whose draft is published before year-end. For firms active in a cross-border context, such as foreign banks with EU clients, the gap-analysis between the two regulations is awaited with impatience. Banks will have to assure compliance with both regimes, which is expected to be a challenging exercise. The speakers focus on the EU regulation, data subjects' rights and data owners' duties such as notification and accountability. Extraterritorial applicability makes the matter particularly challenging – and pressing since the EU norm provides for very high fines. David Rosenthal, Partner, Homburger, Zürich and Philipp Fischer, Partner, OBERSON ABELS SA, Geneva.

January 2017

AFBS Roundtable: FINMA Circular Outsourcing The FINMA issued a revised draft Circular on Outsourcing by banks and insurance companies. It separates the data protection issue from the aspects related to organisation and processes. The FINMA proposes to treat intra-group outsourcing in the same way as outsourcing to third parties. The AFBS Roundtable’s discussion focussed on this aspect. Setting up an intra-group outsourcing follows different steps and is often coordinated from the group headquarters. The different characters of such outsourcing projects should be better reflected in the Circular. The AFBS Comments handed in to FINMA elaborated this aspect in depth. AFBS Secretariat and representatives of member banks.

AFBS Conference: General Terms and Conditions Since 2012 the law on unfair competition requires that firms balance their rights and those of their consumers. The wording of contracts, such as the general terms and conditions, needs to reflect this duty. With growing complexity in the realm of banking regulation, such contracts become increasingly long and difficult to read. The speakers raise points of concern and areas of risk for banks; they further outline solutions how to formulate and present easy to understand contractual documents, which are compliant with the law's requirements. Andrea Rieger, Lawyer LL.M and Partner, LCR-Services, Zürich; Geneviève Berclaz, Independent Consultant and Funder, BE&C - Berclaz Ethics & Compliance, Geneva; Karin Valenzano Rossi, Attorney at Law, Partner, Walder Wyss Attorneys at Law, Lugano.

February 2017

AFBS Conference: 871(m): its content, its impact Section 871(m) of the US Revenue Code entered into force on 1 January 2017. It extends taxation of US-source income to include "dividend equivalent" payments. Beyond the Qualified Intermediary it introduces the Qualified Derivatives Dealer, a non-US entity in charge of reporting. Financial intermediaries need to assure proper product categorisation and monitoring and processing of payment flows. Melanie Taosuwan, Senior Manager, and Claire Kapin, Director, PwC.

AFBS Roundtable: Registration of Work Time The updated regulation on registration of work time has entered into force on 1 January 2016. Banks have been working on the implementation during the year. The event offers a different and enlarged perspective on the topic as it aims at linking the documentation of presence at work with the monitoring of time spent on certain tasks and thus calculation of the cost of providing certain services. Registration of work time should thus been seen as more than a mere administrative hassle, but as a tool for increasing management efficiency. Emanuel Tschannen, Elfenau Switzerland Ltd.

March 2017

AFBS Conference: Automatic Exchange of Information (AEOI)  – the political dimension Banks have often a deficient understanding on the dynamics of the implementation process of the Common Reporting Standard, the core element of the automatic exchange of information. In the presentation, an account on the rapid development of the AEOI and its impact on Switzerland was given. Switzerland was one of the first countries to sign agreements with other countries, but other countries have in the meantime signed much more agreements, due to their more speedy political process. Fabrice Filliez explained the role of the US, the work which is done to assure data security and the monitoring activities which are put in place by the Global Forum. Fabrice Filliez, Secretary of State, State Secretariat for International Financial Matters SIF, Bern

AFBS Groups

Beyond the AFBS Conferences and AFBS Roundtables the Association manages an increasing number of topical working groups meeting at regular intervals to discuss current developments. Off-the-record discussions and trust among members thanks to longstanding participation allow the assessment in detail of various also sensitive issues. The AFBS Groups gather representatives of foreign banks on the following topics:

Capital Markets is a newly-founded group aiming at looking into a different but not less important dimension of the Swiss financial centre. The presence, even if small, of global players in that realm is a key asset of Switzerland.

AFBS Group Lugano is a local group which discusses updates and regulatory developments on various subjects. The diversity of group membership allows addressing a wide variety of topics.

Ostschweizer Gruppe works in a similar way to the AFBS Group Lugano as it discusses various topics and their impact on the individual bank.

AFBS Group KMB allows small and middle-sized banks to gather for an informal exchange of views and experiences over lunch.

HR Zirkel Zürich invites experts to present hot topics and discuss them in-depth with the members. Continuous training was at the core of attention as well as the new regulation regarding registration of work time.

AFBS Group Retail GE meets twice a year to discuss key points on specific regulation and business environment for retail banks in Switzerland. The servicing of clients living in France and working in Switzerland is among the issues.

AFBS Group Funds operates in parallel in Zürich and Geneva. It allows member to discuss points of concern under a clearly circumscribed focus of the foreign fund representation and distribution in Switzerland. The groups liaises with the SFAMA through their representative in the latter's board.

Juristenzirkel Zürich follows up on major changes in legislation and regulation and their impact on the banks' daily business. Invites experts from time to time to delve into specific topics and exchange views among banks.

AFBS Group Rep QI Funds: new entities discussing the market standards for their business and the added value the newly introduced representative for qualified investor funds can offer business, investors and the supervisor.

Trade Finance Geneva: presently focussing on the development of sanctions regimes vis-à-vis Iran and Cuba and its impact on the business opportunities for banks in Switzerland.

AFBS Group CRS/FATCA ZH and GE: on the technical implementation of the FATCA regulation and the definition of the forthcoming common reporting standards governing the automatic information exchange.

CEO and CFO Lunches: In regular meetings, the President and local Board members invite CEOs for an exchange of views on current topics. Similarly, CFOs of different member banks meet to discuss issues of interest.

Activities

April

SIX panel on PRIIPs The Secretariat moderates a client roadshow on the SIX offering of a prospectus database under the new EU regulation. The Packaged Retail Investment and Insurance Products directive PRIIPS obliges financial intermediaries to give their retail clients access to documentation on the products and services offered; the documentation needs to be in the language of the client and up-to-date. This is not an easy task and if every distributor fulfils it on its own it bears the risk of inconsistency. SIX as an infrastructure provider fulfils the administrative task of updating, storing and making accessible the documents to which distributors can provide a link to fulfil their duties.

June

SAQ Certified Wealth Management Adviser – in the AFBS Board The AFBS Board welcomes the financial centres' initiative to promote a common standard in training and certification of client advisers, especially in the realm of cross-border wealth management. It invites representatives from the certifying institution, Swiss Association of Quality, and from training and certification providers to present the programme, its implementation with bank staff and the reaction by clients. It agrees to follow up developments attentively.

Meeting with the State Secretariat for International Finance SIF An AFBS delegation meets the new head of the SIF and a delegation of the State Secretariat. AFBS expounds the importance of foreign banks for the Swiss financial centre and the Swiss economy as a whole. The discussion focuses on the international regulatory agenda. The State Secretariat outlines the key elements of the financial market policy following the assessment of the Global Furm’s Peer Review. It emphasizes the priority of the automatic information exchange in the coming months. With respect to market access, both sides agree that it will be difficult to take up the discussion. The AFBS recalls that Switzerland should limit its request on the access for sophisticated clients only. The SIF informs that it is very interested to promote the financial centre and intends to play an active role.

Distribution et Gestion Cross-Border des Fonds d'Investissement The AFBS Secretariat moderates a panel on the cross-border cooperation for setting up and distributing collective investment products. A group of independent service providers offers a value chain allowing a – Swiss – asset manager to set up a product in Luxembourg and to distribute it in the EU and other jurisdictions. The firms assure the operational setup, regulatory compliance, legal assessment and leave the manager focus on his core activity: managing the asset and meeting the investor. The panel offered participants the possibility to discuss the setup and share experience on its practical implementation.

July

Iranian Banks in Geneva The AFBS Secretariat participates in a meeting organised by the Geneva Chamber of Commerce and the Geneva government to prepare the arrival of an Iranian bank in Switzerland. The bank is particularly interested in establishing partnerships with a developed and internationally connected financial centre such as Switzerland. Its main focus is on providing services for trade finance and investment financing for Iranian enterprises. The lack of experience and need of regulatory and technical expertise offers places such as Switzerland an opportunity to establish new partnerships; they allow it to extend its reach and to attract new business.

Implementation of the Common Reporting Standards The AFBS Secretariat and several Geneva-based foreign banks participate in a working group created by the Geneva Private Bankers' Association. The group assesses impact of the draft regulation and provides input where needed. It offers a welcome complement to the activities of the AFBS' own group as it allows to coordinate practice at the level of the Geneva financial centre. The animated discussions in the Private Bankers' group and the increasing number of Swiss banks joining the AFBS' group confirm the need of a sector-wide coordination of matters.

August

Transmission of Non-Public Information The AFBS Secretariat organises AFBS Roundtables in Zürich and Geneva to collect foreign banks' input on the FINMA draft Circular on Transmission of Non-Public Information. The banks fear that, contrary to the expectations, the Circular does not clarify but introduce additional insecurity. They would prefer clear guidances from the supervisor, which should state under what circumstances a bank may or may not transfer such information to a foreign entity. It should also clarify what foregin entities may receive such information.

September

CCIG Iran The AFBS Secretariat moderates the Geneva-Tehran Business Forum which takes place in the context of the visit to Switzerland of a delegation of entrepreneurs and bankers from Iran. The event is co-organised by the Iran-Switzerland Chamber of Commerce and the Geneva Chamber of Commerce. Participants from Iranian and Western trading firms, certification companies and banks show how diverse attitudes and expectations are and how big opportunities can be. They explain how they used to work in the past and how they hope to be able to work in the future. Instead of having to transfer money from Iran through banks in Central Asian or the Middle East they would like to be able to execute transfers directly to Switzerland and other Western countries. This would save cost and generate volume. Participants hope that the financial dialogue initiated between Iran and Switzerland will bring some simplification.

The AFBS Board discusses FINTECH On its September meeting the AFBS Board invited specialists from the realm of FINTECH. It wanted to gain a better understanding of what initiatives players in Switzerland were pursuing and where competitors such as London stand. The Board agrees to contribute promoting the debate about Fintech in Switzerland by leveraging the efforts made in foreign centres and supporting initiatives deployed already in Switzerland. It decides to develop activities for to allow member banks to get better information on Fintech solutions and on activities in the Fintech sector. The Association’s main activity, though, should be in the realm of regulation. Banks have an interest that a specific regulation evolves which assures that Fintech start-ups can develop and ultimately cooperate with banks.

October

3rd Conference of the European Foreign Banks Associations in London The representatives of different European foreign banks' associations meet for their 3rd Conference in London on Brexit. How Brexit would be handled was at that time completely unclear; whether a hard or a soft Brexit would occur was intensively debated. Most participants fear that the Government would not put the interest of the City of London on the top of the Agenda. Rather, the interest of the industrial areas in Mid-England are likely to dominate. However, the financial centre of London remains an important international place, too important for the EU-economy for being cut off.

EU Trade Commissioners on Switzerland The AFBS Secretariat is invited by the EU Mission to Switzerland in Bern to speak to its working group of Trade Commissioners about Switzerland and its specificities in the realm of finance as well as in its social and political structure. Nearly all EU countries were represented and the meeting offered the opportunity for exchanges of view and discussion of different points of view. The Swiss model of government is particular – due to its history – and needs explaining. Once understood it earns admiration, especially for the fact that a pluri-secular structure has managed to survive and manages to cope with modern-days challenges of international connectedness.

February

Meeting between the FINMA and the AFBS Board The annual meeting of an AFBS Board delegation with representatives from the FINMA Commission and Secretariat focuses on the situation of foreign banks. The FINMA expresses its concern on conduct in cross-border relations. They are not relevant for foreign banks alone, but given the international dimension of the foreign banks' business model, the management of reputational risks in new markets is of particular importance. The FINMA informs on the follow up to the FATF Peer Review, which suggests the authorities to adjust their processes in administrative assistance. Both sides discussed the development of Fintech. Banks and Fintechs are increasingly collaborating; the AFBS delegation supports the Federal Council initiative to design a specific regulatory framework for Fintechs. An international comparison by the AFBS delegation shows that the Swiss approach is equivalent to, even though different from, roads taken in other leading financial centers

Meeting between the Swiss National Bank SNB and the AFBS Board The SNB directorate gives an account of the actual monetary challenges and the situation of the real economy in Switzerland. After a long period of negative inflation, there are signs that the trend is reversed. The Fintech developments are discussed, with the AFBS delegation summarising its discussion with the FINMA and emphasizing its interest in a Fintech-friendy regulatory framework. The SNB does not consider a move towards a "Swisscoin" a priority – such a step would be a mere technical change, and not pose a fundamental problem for monetary policy.

SAQ Certification Wealth Management Adviser Upon a decision of the AFBS Board the Assocaition is assessing the SAQ certification programme and its delivery to banks in view of presenting the offer to the foreign banks. The standard certification is being adopted by an increasing number of banks in Switzerland. Thanks to its design along the ISO standards and its unique approach which merges technical and relational know-how, several firms are working towards it being recognised by other financial centre supervisors. This would make it become the first international standard, which would allow certificate holders to benefit from a unique advantage.

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