19 December 2023

Banks as Gold Importers: Criminal Risks for Boards of Directors of Swiss Banks

  • Articles
  • Compliance
  • Legal
  • Governance / ESG
  • Regulatory Compliance

Banks also need to take care of their supply chains. Especially in the field of gold (conflict minerals). New regulations apply (CO, DDTrO, Criminal Law)

On January 1, 2023, new obligations for gold importers came into force in Swiss law, which are also relevant for banks. Banks that import more than 100 kg of gold directly or via foreign subsidiaries (or process it in Switzerland) are subject to the due diligence and reporting obligations of Art. 964j et seq. CO (Swiss Code of Obligations) and the provisions of the Ordinance on Due Diligence and Transparency Obligations with respect to Minerals and Metals from Conflict-Affected Areas and Child Labor (DDTrO). The board of directors of a bank should therefore have an annual review carried out to determine whether this threshold has been reached, for the first time for the year 2023. If no, the bank is exempt from the due diligence and reporting obligations pursuant to Art. 4 DDTrO and documentation of the audit processes and audit results is sufficient. If yes, the statutory rules apply, including origin verification and, if applicable, reporting obligations.

Why are the rules for bank boards of directors critical? The responsibility for reporting lies with the Board of Directors (Art. 964l CO). The board members who fail to report are personally liable to prosecution (Art. 325ter Swiss Criminal Code). This means that if more than 100 kg of gold is imported from conflict or high-risk areas in 2023 (whereby the import quantities relate to the entire group of companies) and the board of directors does not submit a report (and does not comply with the legal obligations to publish and archive the report), it may be personally fined as a member of the board of directors.

In our practice, we have found that banks are either not aware of the issue or have difficulty with the checks and documentation. Specific industry and legal expertise is required to clarify reliably and efficiently whether the bank has imported gold within the meaning of the DDTrO during the audit period and, if so, how much. We are happy to assist you with our legal expertise together with industry specialists in cross-border gold trading (Helveticor AG, Mr. Raphael Pfyl). The goal is to ensure compliance in this area and to protect the board of directors with pragmatically structured processes and documentation.

Read the interview (German only) with Dr. Martin Eckert on "Nachhaltige Unternehmensführung in der Schweiz: Empfehlungen für KMUs vor Klimaberichterstattung".