Europe & Central Asia
Switzerland risk report
Corruption does not impede business in Switzerland. Interactions with public officials are transparent, and corruption is not common to any particular public sector. Bribery in the private sector is a concern given the sensitivity to bribery of some industries which are well represented in the country and the importance of Swiss financial institutions for the international financial system.. The Swiss Criminal Code criminalizes active and passive bribery and the bribery of foreign public officials, while bribery in the private sector is criminalized under the Unfair Competition Act. A company can be criminally prosecuted and ordered to pay a fine of up to CHF 5 million for acts of corruption committed by individuals working on its behalf. The anti-bribery laws are generally implemented effectively. Although the notion of facilitation payments does not exist in Swiss anti-bribery laws, authorities have clarified that they are considered illegal under most circumstances. Gifts and hospitality can be considered illegal depending on the value, intent, and benefit obtained.
Judicial system Very low risk
There is a low risk of corruption when interacting with the Swiss judicial system. Companies indicate that bribes and irregular payments in return for favorable decisions are very uncommon (GCR 2015-2016). The court system is independent, competent and fair, and is considered effective in settling commercial disputes and challenging regulations (GCR 2017-2018; ICS 2017). The judiciary enjoys high levels of trust among the Swiss; only a tiny fraction believes the judiciary is corrupt (GCB 2017). The organization of the judiciary differs between cantons, and specialized commercial courts are located in Zurich, Bern, St. Gallen and Aargau (ICS 2017). There are significant differences in the application of laws and rules between the different cantons (SGI 2017). Some have expressed concerns about the tradition that, following an unwritten rule, the appointment of judges reflect their affiliation with the parties proportionally in parliament at the time of the appointment (SGI 2017). Enforcing a contract in Switzerland requires slightly less time compared to the average among OECD countries (DB 2018).
Switzerland is a member of the International Centre for Settlement of Investment Disputes (ICSID) and is a signatory to the New York Convention 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
Police Very low risk
Businesses do not face significant corruption risks when dealing with the Swiss police. Only a tiny percentage of Swiss citizens consider corruption to be widespread among the police (GCB 2017). Companies rate the reliability of the police service as among the highest in the world (GCR 2017-2018). Isolated incidents of police corruption do occur, but the government has effective mechanisms to investigate and punish abuse (HRR 2017).
Public services Very low risk
Companies are not likely to encounter corruption when obtaining public services in Switzerland. Companies report that irregular payments and bribes almost never occur when obtaining public utilities, business permits or licenses (GCR 2015-2016). Switzerland's public institutions are among the most effective and transparent in the world, and the regulatory environment is transparent, non-discriminatory and encouraging for investors (GCR 2017-2018; ICS 2017). The OECD has ranked the Swiss public administration as the most efficient in the world (ICS 2017). Less than one in ten citizens believe local government officials are corrupt (GCB 2017). The public administration generally acts predictably, but at the local and canton levels a very pragmatic culture might reduce legal certainty somewhat, while increasing flexibility and efficiency (SGI 2017).
Starting a business takes slightly longer than the average in OECD countries (DB 2018).
Land administration Very low risk
Businesses express strong confidence in the government's ability to protect property rights (GCR 2017-2018). There are no known cases of expropriation in Switzerland (ICS 2017).
Registering property in Switzerland takes less time than the average among OECD high-income countries (DB 2018).
Tax administration Very low risk
The Swiss tax administration carries a low risk of corruption. Companies report that bribes and irregular payments when making tax payments are very uncommon (GCR 2015-2016). Fewer than one in ten Swiss citizens perceive tax officials as corrupt (GCB 2017). Legislation on direct taxes of the confederation, cantons, and townships prohibits the tax deductibility of bribes (ICS 2017). Switzerland has faced criticism from the OECD and EU for giving preferential tax treatment to foreign firms over their domestic counterparts (SGI 2017). In February 2017, Swiss voters rejected a proposal to abolish the preferential treatment by lowering taxes for domestic firms accordingly (FT, Feb. 2017). Paying taxes is significantly less time consuming on average compared to other OECD countries, but payments have to be made more frequently (DB 2018).
As one of the world’s largest financial centers, Switzerland has been criticized for not implementing the necessary measures to prevent tax evasion and money laundering. In one case, Credit Suisse pleaded guilty to helping US citizens evade taxes. The bank reached a settlement with US prosecutors, who had pressed the criminal charges, to pay USD 2.5 billion in penalties (FitW 2015). Credit Suisse continues to face investigations, most recently by authorities from the Netherlands, the UK, and France, over allegations that its clients engage in money-laundering and tax fraud (FT, Apr. 2017). The bank ultimately paid a USD 135 million fine to U.S. authorities over the allegations (Swiss Info, Nov. 2017).
Customs administration Very low risk
There is a low risk of corruption at the Swiss border. Burdensome procedures, tariff barriers and technical standards and requirements are among the main constraints for importing and exporting in Switzerland (GETR 2016). Very few companies consider corruption at the borders as a problematic factor for trading, and the transparency and efficiency of the border administration are very high (GETR 2016). Irregular payments and bribes during customs procedures are very uncommon (GETR 2016). Trading across borders in Switzerland is less time-consuming, yet more costly on average compared to other OECD countries (DB 2018).
Public procurement Low risk
There is a moderate to low risk of corruption in the Swiss public procurement sector. Companies report it being uncommon to pay bribes to win contracts in Switzerland (GCR 2015-2016). Favoritism in decisions of government officials and diversion of public funds are both perceived to be rare (GCR 2017-2018). Some have expressed concerns about close ties between the political and economic elite, due to the small size of the country and the possibility of these close networks providing incentives to disregard formal rules (SGI 2017).
In one example, the former IT head of the Federal Office for the Environment was sentenced in 2015 to prison for two and a half years (15 months of which are suspended) for passive bribery and other misconduct, in relation to accepting money and gifts in exchange for granting contracts to a number of IT firms (HRR 2016).
Natural resources Very low risk
The risk of corruption in the Swiss natural resource sector is low. The government is highly engaged with various initiatives to improve the governance of natural resource extraction, including financial and governing support to the Extractive Industries Transparency Initiative (EITI). The EITI aims at improving the accountability of the expenses and profits deriving from the oil, gas and mining industries around the world. Switzerland has also contributed to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, which assists producers in fulfilling their duties under the Dodd-Frank Act, and has launched the Better Gold Initiative to promote sustainable value chains for gold extraction and trade (EITI, Feb. 2014).
Switzerland is home to an estimated 30 percent of the global offshore wealth, so tax evasion and money laundering are very important issues in the banking sector (FitW 2015). Banks in Switzerland are not required to disclose the identity of individuals who control and benefit from companies with Swiss bank accounts, making it easier for corrupt officials and businesspeople to hide proceeds of crime (TI, Sep. 2014). The Financial Market Supervisory Authority regulates and supervises financial institutions and enforces the Anti-Money Laundering Act, which includes customer due diligence and record requirements. Recurring scandals and multiple money laundering cases have triggered criticism of Swiss authorities and financial institutions for being too lenient in their monitoring efforts to ensure that proper due diligence is being performed (SWI, Sep. 2014).
Both praise and criticism have been directed to Switzerland's efforts in revising its secrecy regulations. Switzerland has recently signed a tax transparency agreement with the European Union to put an end to bank secrecy for EU residents. The agreement will be enforced in 2018 to allow both sides to start sharing data on EU resident's financial accounts (RT, May 2015). The Federal Council recently passed the Federal Act on Expanding Criminal Liability for Breaches of Professional Confidentiality. This has increased the penalties for whistleblowers breaking Swiss secrecy laws from three to five years imprisonment (The Wall Street Journal, July 2015). Rudolf Elmer, involved in one of the more reported whistleblower cases on banking secrecy, ended up being fined USD 51,700, payable if another crime is committed. Rudolf Elmer was charged for submitting confidential client data to the website WikiLeaks (The Wall Street Journal, Jan. 2015). Elmer claims that he was pursued to reveal the public financial data on politicians accused of corruption, along with companies linked to Bin Laden's family, shady arms brokers and Mexican officials linked to drug dealers (Tax Justice Network, July 2015).
The Swiss Criminal Code criminalizes active and passive bribery and bribery of foreign public officials. Bribery in the private sector is criminalized under the Unfair Competition Act, which also prohibits abuse of office, extortion and money laundering. Bribing Swiss and foreign public officials is punishable by up to five years' imprisonment, while private sector bribery carries sentences of up to three years’ imprisonment (CMS 2016). A company can be held criminally liable under the Criminal Code for acts of corruption committed by individuals working on its behalf (CMS 2016). A company that 'has not undertaken all requisite and reasonable organizational precautions' required to prevent the corrupt act is subject to criminal prosecution and a fine of up to CHF 5 million (CMS 2016). Switzerland revised its rules, including criminalizing bribery using a third party, for private bribery in 2016 following the scandals involving FIFA, in order to make prosecution easier (Lexology, Aug. 2017a). There is no exception for facilitation payments under Swiss law for domestic bribery, but authorities have clarified that small facilitation payments are considered illegal if they lead a public official to breach his or her duties or influence the power of discretion (CMS 2016). Making a facilitation payment to a foreign official is not criminalized (CMS 2016). Gifts and hospitality can be considered illegal depending on the value, intent, and benefit obtained (Lexology, Aug. 2017a). Swiss law discourages civil servants from accepting any advantage that can influence the impartiality of their services, but the limit set on gifts given to public employees varies between departments and cantons (ICS 2017). The government enforced anti-corruption laws effectively (HRR 2017). Despite GRECO recommendations, Switzerland has still no legislation concerning the transparency of party funding (GRECO 2015). The law on federal staff makes reporting on corrupt practices an obligation of federal office holders. The country lacks specific laws on the protection of whistleblowers and whistleblowers are liable to civil and criminal penalties (Lexology, Aug. 2017b).
Switzerland is a signatory to the OECD Anti-Bribery Convention, the United Nations Convention Against Corruption (UNCAC) and the Council of Europe’s Civil and Criminal Law Conventions against Corruption and is a member of the Group of States Against Corruption (GRECO).
Freedoms of speech and of the press in Switzerland are constitutionally guaranteed and respected by the government (HRR 2017). Although the market is dominated by the large state-owned broadcasting corporation and private news conglomerates, the media environment is generally free and diverse (FitW 2016). It is a crime to publish information based on "secret official discussion" (HRR 2017). The Swiss media environment is considered 'free' (FotP 2017).
The government respects the rights to freedom of assembly and association (HRR 2017).
- World Bank: Doing Business 2018.
- OECD: Status of Jurisdictions Participating in The Convention on Mutual Administrative Assistance in Tax Matters 2018.
- SSIF: Status of Automatic Exchange of Information on Financial Accounts (AEOI) Treaties 2018.
- Tax Justice Network: Financial Secrecy Index (FSI) 2018.
- World Economic Forum: Global Competitiveness Index 2017-2018.
- Freedom House: Freedom of the Press 2017.
- Transparency International: Global Corruption Barometer 2017.
- US Department of State: Human Rights Report 2017.
- Bertelsmann Stiftung: Sustainable Governance Indicators - Switzerland Report 2017.
- US Department of State: Investment Climate Statement 2017.
- The Economist: "One Man's Fight Against the Swiss Offshore Banking System", 23 December 2017.
- Swiss Info: "Credit Suisse Fined USD 135 Million for Malpractices", 13 November 2017.
- Lexology(a): "Anti-Corruption & Bribery in Switzerland", 3 August 2017.
- Lexology(b): "Whistleblowing in Switzerland", 3 August 2017.
- FT: "Tax Evasion Continues to Haunt Swiss Banking", 17 April 2017.
- FT: "Swiss Voters Reject Corporate Tax Reform", 12 February 2017.
- ch: "Swiss Say Goodbye to Banking Secrecy", 1 January 2017.
- World Economic Forum: Global Competitiveness Report 2015-2016.
- Freedom House: Freedom in the World 2016.
- Financial Action Task Force: Mutual Evaluation Report of Switzerland 2016.
- CMS: Guide to Anti-Bribery and Corruption Laws 2016.
- World Economic Forum: Global Enabling Trade Report 2016.
- Nexia International: "New Transparency Rules for Ownership of Swiss Legal Entities", January 2016.
- Freedom House: Freedom in the World – Switzerland 2015.
- GRECO: Third Evaluation Round - Second Interim Compliance Report on Switzerland, August 2015.
- Wall Street Journal: 'It Just Got More Risky to Violate Swiss Banking Secrecy', 1 July 2015.
- Tax Justice Network: 'Guest blog: how Switzerland corrupted its courts to nail Rudolf Elmer', 1 July 2015.
- Wall Street Journal: 'Swiss Whistleblower Rudolf Elmer Convicted of Violating Banking-Secrecy Laws', 19 January 2015.
- EITI: ‘Switzerland – Broader engagement with the governance issues in natural resources’, February 2014.