Serving foreign clients: the cross-border rules

The Swiss perspective: inbound services

Swiss law is liberal towards foreign providers that serve clients in Switzerland. FinSA and FinIA do not require a foreign bank or asset manager to obtain a Swiss licence merely because it serves Swiss clients from abroad on a cross-border basis. The foreign provider must comply with the Swiss rules of conduct when it provides financial services to clients in Switzerland. Its client advisers must be entered in the Swiss register unless the provider is prudentially supervised at home and serves only professional or institutional clients.¹ A physical presence in Switzerland in the form of a branch or a representative office, by contrast, requires authorisation from FINMA. This openness reflects a deliberate choice. Switzerland, which depends on access to foreign markets, has little interest in erecting barriers to foreign providers that it would then have to defend in trade negotiations. The asymmetry is nevertheless striking, because Zurich institutions face far more restrictive rules when they serve clients in the European Union.

The European Union

Switzerland has no agreement with the European Union on financial services. Nor has the Swiss regime been recognised as equivalent under the provisions of MiFID II that would allow Swiss firms to serve professional clients across the Union from Switzerland. Access therefore depends on the national law of each member state. Some member states allow third-country firms to serve their residents on a cross-border basis under certain conditions, others require a local branch for retail clients, and all recognise that services provided at the exclusive initiative of the client, known as reverse solicitation, fall outside the licensing requirement.² Reverse solicitation, however, is a narrow exception that does not permit marketing and must be documented in each case. For Zurich banks with a European client base, the practical consequence has been the establishment of subsidiaries in the European Union, especially in Germany, Luxembourg, Austria and Spain, and the definition of country manuals that tell client advisers exactly what they may and may not do in relation to residents of each state.

Germany, the largest European market for Zurich private banks, illustrates the approach. Under the German Banking Act, a foreign institution that intentionally targets the German market in order to offer banking or financial services repeatedly to persons resident in Germany requires a licence. The guidance of the Federal Financial Supervisory Authority (BaFin) distinguishes between active targeting, such as visits to clients, mailing campaigns or targeted internet offers, and the passive freedom to provide services, which covers business initiated by the client.³ BaFin may exempt foreign institutions from the licensing requirement under § 2(5) KWG if they are effectively supervised in their home state. For Swiss banks, a memorandum of understanding between the two countries created a simplified exemption procedure that allows them to acquire and serve German clients directly from Switzerland without a German intermediary. The procedure was interrupted in 2021 over questions of reporting and resumed after the German and Swiss authorities had clarified the issue at the end of that year.⁴ The tax and criminal law aspects of German clients, including the Double Taxation Agreement and the exit tax, are the subject of Part K of this book.

A new constraint arises from the sixth Capital Requirements Directive (CRD VI). From 11 January 2027, third-country institutions that provide core banking services, namely deposit-taking, lending and guarantees, to clients in the European Union will in principle have to establish a licensed branch in the member state concerned. The new regime exempts reverse solicitation, investment services governed by MiFID II and interbank business, and agreements concluded before 11 July 2026 remain valid until they expire.⁵ For private banks, the most affected product is the Lombard loan granted to European clients from Switzerland. The directive forces banks to review whether they can continue such lending on a cross-border basis, whether they should book it through a European subsidiary, or whether it can be structured within one of the exemptions. Since the grandfathering date of 11 July 2026 has already passed, the banks have had to decide how to treat new loans to European clients in the months before the directive applies.

The United Kingdom and the Berne Financial Services Agreement

The United Kingdom offers a contrasting example. After its departure from the European Union, it negotiated with Switzerland a treaty based on the mutual recognition of the outcomes of regulation. The Berne Financial Services Agreement was signed on 21 December 2023 and entered into force on 1 January 2026.⁶ It allows Swiss banks, securities firms, fund management companies, managers of collective assets and portfolio managers authorised by FINMA to provide investment services on a cross-border basis to professional clients, eligible counterparties and high-net-worth clients in the United Kingdom, with high-net-worth individuals defined by a threshold of assets of more than GBP 2 million. Retail clients remain excluded.⁷ FINMA published guidelines on the application of the agreement in November 2025, and FINMA, the Financial Conduct Authority and the Prudential Regulation Authority concluded a memorandum of understanding on supervisory cooperation.⁸

For Zurich private banking, the Agreement is the first treaty since the end of banking secrecy that opens a major foreign market. London is a significant source of wealth for Swiss banks and independent managers. The inclusion of portfolio managers licensed under FinIA gives the licence an additional value that its opponents in the parliamentary debate had not foreseen. The Agreement also serves as a model that Switzerland may wish to propose to other states, particularly in Asia and the Middle East, as an alternative to the equivalence regime of the European Union.

Notes

1. FINMA, “Registration body” (n. above). ↩
2. Articles 39 and 42 of Directive 2014/65/EU (MiFID II) and Articles 46 and 47 of Regulation (EU) No 600/2014 (MiFIR), as summarised in Macfarlanes, briefing on MiFID II third-country access for non-EU private banks (May 2015), https://www.macfarlanes.com/media/vwedlgaw/fortress-europe-mifid-ii-for-non-eu-private-banks-third-country-access-issues-v2.pdf. On the narrow reading of the client’s own exclusive initiative, see ESMA, public statement on reverse solicitation (ESMA35-43-2509), 13 January 2021, https://www.esma.europa.eu/sites/default/files/library/esma35-43-2509_statement_on_reverse_solicitation.pdf. ↩
3. BaFin, “Merkblatt zur Erlaubnispflicht von grenzüberschreitend betriebenen Geschäften”, 1 April 2005, last amended 11 March 2019, https://www.bafin.de/SharedDocs/Veroeffentlichungen/DE/Merkblatt/mb_050401_grenzueberschreitend.html. The licensing requirement is based on § 32 of the German Banking Act (KWG). ↩
4. Deloitte Switzerland, “Vereinfachtes Freistellungsverfahren für Schweizer Banken nach dem deutschen Kreditwesengesetz”, 18 February 2022, https://www.deloitte.com/ch/de/Industries/financial-services/perspectives/simplified-exemption-procedure-swiss-banks.html. The article dates the memorandum of understanding to 2014. ↩
5. Daniel Dedeyan and Florian Thomas Willi, “New rules for Swiss banks serving EU customers under CRD VI”, Loyens & Loeff, 22 April 2026, https://www.loyensloeff.com/insights/news--events/news/new-rules-for-swiss-banks-serving-eu-customers-under-crd-vi/. The authors identify four options for Swiss banks: a non-bank lending vehicle, restriction to exempted activities, an EU branch or an EU subsidiary. ↩
6. Dubra, “BFSA: a novel agreement with a big impact” (n. above); Financial Conduct Authority, “Berne Financial Services Agreement for UK and Swiss firms”, https://www.fca.org.uk/firms/berne-financial-services-agreement. ↩
7. Financial Conduct Authority, “Berne Financial Services Agreement for UK and Swiss firms” (n. above). According to the FCA, Swiss firms notify FINMA through its survey and application platform, and FINMA forwards the information to the British authorities. ↩
8. FINMA, “Berne Financial Services Agreement”, https://www.finma.ch/en/documentation/legal-basis/international-treaties/berne-financial-services-agreement/. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.