Relevance of the topic to SZKB and goals

Complying with regulations and fostering healthy growth that aligns with SZKB’s risk profile is essential for maintaining SZKB’s impeccable reputation for responsible business conduct in regard to the financial sector. Insufficient compliance could lead to reputational harm, sanctions (such as fines, claims for damages or liability claims), loss of market share and economic damage for the Canton of Schwyz as the owner of SZKB.

Management approach

The «Code of Conduct of Schwyzer Kantonalbank» outlines the fundamental principles necessary for successful and ethical business conduct at SZKB. This Code is issued by the Bank Council of SZKB and is applicable to all employees and governing bodies of the Bank. The Code of Conduct is available to all employees on the intranet and is also published on the website www.szkb.ch. It contains statements on compliance with regulations and responsible behaviour; on integrity, fairness and professionalism in dealing with internal and external partners (including the avoidance of conflicts of interest); and on sustainability, risk behaviour and whistleblowing.

Detailed provisions on the Code of Conduct are outlined in the internal regulations and directives of the Bank. The Bank Council issues the regulations, while the Executive Board of SZKB issues the directives.

SZKB does not accept employees engaging in illegal conduct or violating internal policies. Audits and controls by supervisors, second-line units (in particular by Risk Management and the Compliance function) and the risk-based approach of the internal and external auditors (PricewaterhouseCoopers) ensure that the requirements are met.

Key measures:

• Regulatory compliance
  
• Conflicts of interest
  
• Whistleblowing
  
• Taxes

Regulatory compliance

The publicly available «Code of Conduct of SKZB» outlines the following principles with regard to regulatory requirements: «SZKB complies with all applicable laws, guidelines and regulations. The governing bodies and employees of SZKB are dedicated to demonstrating exemplary behaviour and to taking conscientious, diligent action in this regard.»

In this context, there are numerous directives and work instructions which with all SZKB employees are required to comply. This applies in particular to the areas of combating money laundering, due diligence (both when entering into and managing business relationships), managing conflicts of interest, adherence to market conduct rules and ensuring compliance.

SZKB follows the Wolfsberg Group principles published on its website. The Wolfsberg Group has set for itself the goal of establishing a framework and guidelines for managing risks related to financial crime. By using the Wolfsberg Questionnaire, SZKB can evaluate its partner banks’ efforts to prevent money laundering, particularly in the areas of «know your customer» and combating the financing of terrorism.

To support the fight against corruption and money laundering, SZKB uses the global databases of World-Check and Dow Jones to identify politically exposed persons, individuals and organisations with elevated risk and financial, regulatory and reputational risks. These databases are used to verify transactions as well as new and existing customers. 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, human trafficking or other offences under Swiss criminal law legislation. 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 in and around the Canton of Schwyz.

All SZKB employees attend annual training courses on topics relating to regulation (such as combating money laundering, due diligence, FATCA, etc.) and good corporate governance as well as their ethical implications.

Conflicts of interest

In its publicly available «Code of Conduct», SZKB stipulates that conflicts of interest are to be avoided and that SZKB’s governing bodies and employees are prohibited from deriving any unauthorised personal benefit from business opportunities that arise through the use of company property or information, or as a result of their position within SZKB. SZKB’s website provides details on different types of conflicts of interest and offers guidance on how to handle and mitigate them, thereby demonstrating that the Bank has extensive internal regulations and processes in place. These are found in the «Policy on Dealing with Conflicts of Interest» and «Personnel Regulations» issued by the Bank Council. The regulations are available to all employees on the intranet and apply at all levels and across all business areas of SZKB.

Whistleblowing

SZKB has established a reporting office to which employees and third parties, such as clients and suppliers, can report misconduct at any time by e-mail or in writing. Related information is made available to the public at www.szkb.ch.

Information can also be provided anonymously and will be treated confidentially unless there is a legal obligation to disclose it. Provided that reports are submitted in good faith, SZKB will protect employees who report wrongdoing from any related sanctions. The handling of information received is governed by the «Whistleblowing Policy» issued by the Bank Council of SZKB, which is available to all employees on the intranet.

Taxes

SZKB is a member of the Swiss Bankers Association and fulfils the obligations arising from the Agreement on the Swiss banks’ code of conduct with regard to the exercise of due diligence. Detailed provisions are stipulated in binding directives.

SZKB does not provide tax advisory services. Clients are evaluated with regard to the existence of qualified tax offences, and the tax compliance information they provide is checked. SZKB holds the FATCA status «Registered Deemed Compliant FFI – Local FFI» and systematically implements the relevant restrictive FATCA rules in cooperation with an independent specialised consulting firm.

As an independent institution operating under cantonal public law, SZKB is not subject to direct taxes on profits and capital at the federal, cantonal or municipal levels. The interest on the endowment capital provided by the Canton of Schwyz and the settlement of the state guarantee are based on the provisions of the publicly available «Law on the Schwyzer Kantonalbank».

Assessment of effectiveness

In 2023, SZKB addressed the requirements in the area of sustainability. In particular:

• The allocation of responsibilities within SZKB and investment controlling underwent a review.
  
• Potential risks associated with greenwashing have been identified, and a corresponding greenwashing framework is being developed.
  
• The new self-regulation guidelines of the Swiss Bankers Association have been implemented.

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.

In the reporting year 2023 (as in the previous year), the whistleblowing office did not receive any reports.

In the reporting year, as in the previous year, it was not necessary to submit any reports or take any measures regarding untaxed client assets.

As in the previous year, neither fines nor other non-monetary sanctions were imposed on SZKB in 2023 due to non-compliance with laws and/or regulations (in general, but especially not in the social or economic area).

SZKB has determined that it has fulfilled the stipulations of «regulatory compliance» and ensured «healthy growth» and «reputation» based on the measures taken.

Further development and next steps

To ensure that SZKB continues to meet all regulatory requirements in future, the Bank uses a regulatory radar scheme to proactively monitor current developments. Requirements in regard to sustainability (including those relating to greenwashing) are also taken into account. Management regularly reviews and discusses the regulatory radar. SZKB will also implement a greenwashing framework in 2024.