Switzerland is still in the last century when it comes to legislation with respect to the opening of a bank account via the Internet

Swiss finish

How is it possible that Swiss legislation is so backward when it comes to Internet banking? Certainly out of a fear of establishing a relationship with a straw man or because contracts signed with a pen on paper cannot be falsified. However this is obsolete thinking. Whether or not the client has complied with his tax obligations changes absolutely nothing.

Indeed, a resident of Switzerland (or a person resident abroad), wishing to open an account – as an individual – with a Swiss institution is required to sign a multitude of contractual documents by hand and be “physically” identified by a financial intermediary, directly or indirectly supervised by FINMA, the Swiss financial markets supervisory authority, pursuant to the provisions of the Swiss Federal Act on Money Laundering (MLA), the ordinances in force and the CBD (Convention on Bank Diligence). In addition, the holder of the account must fill out by hand and sign the various forms (FATCA) to satisfy the requirements the American tax authorities.

The legal framework

Despite the advances in Internet technology, vocal recognition, biometrics and digital identification and the progress in IT security, it is currently still not possible to open a bank account entirely using the Internet by connecting to a website with a banking institution. Indeed, the client is required to meet a financial intermediary (banker, wealth manager, lawyer, etc.) and the latter is required to photocopy the identity documents or the passport of the client and to certify that the copy is in conformity with the original!

Even if, under Swiss law, an electronic signature is deemed the equivalent of a handwritten signature, an electronic signature is only valid under certain restrictive conditions and the simple fact of checking the box on an online digital form may not suffice when a dispute is brought before the courts.

In terms of progress, we are halfway there

Already, for several years, the means to execute financial transactions by using personal codes through digital access has been multiplying. For example, the user of a credit or debit card “signs” a bill/invoice by tapping their PIN (Personal Identification Number) on the keyboard of a computer, or a (mobile) terminal at a retailer or at an ATM.

This type of identification has turned out to be more reliable than a handwritten signature, above all when it permits instant verification as to whether the client possesses a sufficient line of credit or has money in their account for the purposes of acquiring the goods or services. Unfortunately, in order to apply an archaic security process, the PIN for the customer’s card is sent to them by mail and previously, the customer was required to provide a handwritten signature on the application form for the card as well as in order to accept the terms of issuance.

In a world where every minute counts, making people travel to a point-of-sale or a branch is becoming more and more tedious, it is therefore important to facilitate access to online financial services, at the very least, for residents of Switzerland.

The future

It is absolutely necessary that the players involved and Internet users take an active part in the debate on the current revisions to the ordinance on money laundering. The deadline for submitting comments expires on April 7, 2015.

Within this framework, it is indispensable to facilitate identification over the Internet of a client who wishes to benefit from financial services and to encourage the use of low-cost electronic signatures. Notwithstanding the role played by organizations for consumer protection in this consultation, customers should not be treated as wards of court and the current over burdensome procedures should be simplified, especially given that the providers of financial services charge their customers for the costs incurred in following them.

Please feel free to send your comments, suggestions and concerns to:
auditionLBA@actionfinance.ch