Regulation > Commodity Market Supervisory Authority Act CMSAA

Summary of the Commodity Market Supervisory Authority Act, CMSAA, of 1 April 2014

Overview of the law and its mechanics

Chapter 1

Article 1 of the Commodity Market Supervisory Authority Act specifies that the purpose of the law is to regulate the organization and establish the instruments of supervision to be used by ROHMA in its task of supervision of companies active in the commodity sector. Article 2 regulates the relationship between the present law and the Commodities Act (CA). Article 3 sets out who is subject to ROHMA’s supervision, meaning those legal entities defined in article 2 CA requiring a license or consent from ROHMA and audit companies certified by ROHMA. Article 4 establishes ROHMA’s legal form, being an institution established under public law with its own legal personality and having its registered office in Geneva. This provision also sets out the institution’s name, the Commodity Market Supervisory Authority, “ROHMA” (from the German, Rohstoffmarktaufsicht), and clarifies that it must organize itself according to the principles of good governance and maintain its own accounting.

Article 5 sets out the aims of supervision of companies in the commodity sector, which are: to contribute to fighting the resource curse; to help developing countries rich in natural resources to mobilize their own development, in accordance with Switzerland’s humanitarian tradition and its foreign policy principles; to maintain Switzerland’s reputation as a responsible and fair market; and to guarantee the respect for human rights and international environmental standards. The article also establishes ROHMA’s main functions and powers, which are to prevent dirty commodities from circulating in the legitimate commercial system; ensuring transparency of payments from commodity companies to governments in developing countries from where the commodities derive; to develop due diligence procedures designed to ensure that Swiss companies in this sector do not conduct problematic business relations with politically exposed persons; to combat aggressive tax optimization practices within the sector and to defend the reputation and integrity of the Swiss commodity centre; and to contribute to and generally maintain competitive conditions.

Article 6 lists the tasks attributed to ROHMA. These include supervision in accordance with the Commodities Act and this law, and the guarantee of adherence to international commitments. Article 7 on the other hand stipulates that ROHMA will adopt circulars where required. This provision also ensures transparency of the regulatory process and the appropriate involvement of affected parties, including civil society. To this end, ROHMA enacts directives to implement these principles in consultation with the Federal Department of Foreign Affairs, the Federal Department of Finance, the Federal Office for the Environment and the Federal Office of Justice and Police.

Chapter 2 Organisation

Section 1 Organs and staff

Article 8 states that ROHMA must consist of a board of directors, a management team and an auditor. Articles 9 and 10 define the tasks of the board of directors and management team. Article 11 establishes that ROHMA is divided into departments and Article 12 establishes the Federal Audit Office as external auditor. Article 13 refers to the conditions for staff and Article 14 deals with official secrecy.

Section 2 Finance and budget

Articles 15 to 18 determine the procedures relating to the financing of the institution, which includes the fees for each procedure and the supervision fee. Article 19 deals with the liability of ROHMA, its organs, staff and persons authorized by it. Article 20, meanwhile, confirms ROHMA’s status as tax-exempt.

Section 3 Independence and supervision

Article 21 sets out the autonomous and independent nature of ROHMA, as well as its relations with the Federal Council.

Section 4 Public information and data processing

Article 22 deals with ROHMA’s obligations with respect to the information it makes public concerning its supervisory practices and the general state of the commodity industry, and Article 23 deals with how ROHMA processes data.

Chapter 3 Instruments of supervision

Section 1 Audit

Article 24 the auditing requirements for companies caught by the regime. There are two types of external audits. The usual audit required to be carried out by Swiss companies and the commodity industry-specific audit, which must be carried out by auditors that have been certified by ROHMA. Both types of audits must be performed by different and independent audit firms. In certain cases, ROHMA may also carry out an industry-specific audit directly. The company is liable for the cost of carrying out the audits.

Article 25 deals with the conditions for the approval of commodity industry-specific audit firms. These should be: subject to the supervision envisaged by the law on the supervision of auditors; sufficiently organized to carry out the commodity industry-specific audits envisaged by the Commodities Act. In addition, the provision provides that audit firms can not carry out their duties on behalf of the same company for more than five in every 15 years.

Article 26 sets out the requirements for the reports by audit firms and the types of measures taken by them in the event of breaches or other irregularities. Where firms find serious violations of the law or serious irregularities, they shall promptly notify ROHMA, which itself may refer the matter to the criminal prosecution authorities.

Section 2 Whistleblower protection

Article 27 establishes that ROHMA has procedures for licensed companies’ personnel and for third parties to report allegations of improper and/or illegal conduct to designated personnel, including such acts or omissions that would violate the principles contained in ROHMA’s regulations. Procedures are fair, accessible and offer effective remedies, including recommendations for the prevention of recurrence. They also facilitate reporting by persons with reason to believe that improper or illegal conduct, or a violation of ROHMA’s law or circulars, has occurred or is about to occur Such conduct is to be reported to designated individuals within a company and, where appropriate, to ROHMA. Furthermore, the provision makes clear that ROHMA investigates allegations promptly, impartially and with due consideration to confidentiality, and keeps records about any such allegations, findings or disciplinary measures. ROHMA also ensures that licensed companies take appropriate disciplinary action, which could include termination of employment in case of a finding of such violations or unlawful behavior. ROHMA also ensures that licensed companies personnel who report wrongdoings in good faith are provided protection against any retaliation for making such reports, such as shielding them from unwarranted or otherwise inappropriate disciplinary measures, and that matters raised are examined and acted upon without undue delay.

Section 3 Supervision

Once a license has been granted, companies are subject to ongoing supervision through yearly industry-specific audits carried out by specialized ROHMA-certified auditors. This process is described under Article 28 and is to be distinguished from the duty to undergo financial auditing. The results of the industry-specific audits are communicated to ROHMA by the auditor responsible for the report, and any suspicious cases or evidence of breaches must be brought to its attention. Requirements for auditors to become ROHMA-certified are set out at article 29, while the maximum time period an industry-specific auditor may be appointed for is set out at article 30.

Commodity companies caught by this or the Commodities Act, as well as their employees, consultants and shareholders, are explicitly required to cooperate in the provision of all relevant information and documents to ROHMA and/or their auditors under Article 31. Auditors are also entitled to access company property to determine any fact for the purposes of carrying out their audit. ROHMA is authorized by Article 32 to conduct inspections of company offices without prior notice, to look at or make copies of any documents, and, in the case of suspicious findings, to confiscate evidence.

Where ROHMA has reason to believe a company has broken the law, ROHMA may engage both local and cantonal police to assist in the conduct of inspections. All personal data is to be kept confidential.

Article 33 states that if the investigation reveals that the subject has seriously violated the supervisory laws and that no measure to put the situation right has been taken, ROHMA may make and publish a declaratory ruling confirming that no remedial action has been taken by the company.

Section 4 Further Investigations

ROHMA is required to inform companies within 14 days of the provision of the industry-specific audit report as to whether or not it intends to carry out further investigations (Art. 34).

Further investigations will be carried out under Article 35, (a) where the information provided by the auditor points to activities that would contradict the aims set out at article 1, (b) where the circumstances under which a company is operating no longer fit the license that was originally applied for, (c) in the event ROHMA or the auditor discovers activities being carried out that have not been authorized, or (d) if ROHMA comes to learn of any breach of Swiss or international law. Upon completion of its investigations, ROHMA will communicate its findings to the company.

Article 36 requires ROHMA to look particularly closely at activities that contradict the aims set out in Article 5 or at companies who have previously breached their obligations under this law.

Article 37 clarifies that where further investigations reveal serious violations of the law, ROHMA will publish its final decision, including details of the individuals concerned.

Article 38 describes how information received about questionable behavior or potential breaches of the law is recorded by ROHMA in a database (the watchlist), as stipulated by article 22 of the Commodities Act. Should it be necessary in a particular case to consider the guarantee of proper business conduct of a person or company, the information collected may also be used for this purpose.

Article 39 sets out the conditions for confiscation by ROHMA of any profit made through violation of the supervisory laws by a commodity company or person performing an executive function. The right to order a confiscation is prescribed after ten years. The seized assets are returned to the affected country of origin to the extent possible, or, where not possible, are vested in the Confederation.

ROHMA may, as a result of its enquiries, also impose fines and confiscate documents under articles 212 ss. of the Criminal Procedure Code. Article 40 sets out when ROHMA may take liquidation measures, through a binding administrative procedure that leads to a final decision. ROHMA can put companies who have persistently breached the conditions of their licenses, or who have committed a serious offense, into liquidation. The regulation of liquidations is established in accordance with the Code of Obligations, as well as under the Commodities Act. The result of any such liquidation procedures is published by ROHMA.

Investigating agents

Article 41 stipulates that ROHMA may appoint an independent and suitably-qualified person to investigate circumstances relevant for supervisory purposes at a supervised entity or to implement supervisory measures that it has ordered (an investigating agent). It is for ROHMA to specify the duties of the investigating agent in the appointment order and who determines the extent to which the investigating agent may act in the place of the management bodies of the supervised person or entity. The supervised entity must allow the investigating agent access to its premises and provide him or her with all the information and documents that the investigating agent requires to fulfill his or her duties. The costs of the investigating agent are borne by the supervised entity. Article 42 specifies that ROHMA may revoke the license of a supervised entity if it no longer fulfills the requirements for its activity or seriously violates the supervisory provisions. On revocation, the supervised person or entity loses its right to carry out its activity. In addition to the revocation of licenses, ROHMA may also impose fines.

Section 5 Legal Assistance

Articles 43 and 44 cover assistance both between Swiss governmental authorities and with foreign authorities. ROHMA is entitled to receive any information from any Swiss governmental and cantonal authorities. ROHMA is also required to inform any other relevant authorities when it has information that could be used by those other authorities, such as when it relates to criminal activity or fiscal offenses.

ROHMA may also provide information to foreign authorities, so long as those authorities confirm that the data will only be used for purposes that conform with this law, and in the case of criminal proceedings, that the conditions of international mutual assistance will be employed.

Chapter 4 Criminal Provisions

Article 45 states that anyone who wilfully without a license carries out an activity that requires a license under the Commodities Act is liable to a custodial sentence of up to three years or to a monetary penalty. Article 46 states that anyone who wilfully provides ROHMA or an audit company with false information is liable to a custodial sentence of up to three years or to a monetary penalty. Failure to cooperate with ROHMA under Article 47 or attempting to hinder an inspection under Article 48 or falsifying documents leads to fines. Aiding and abetting are also punishable. Article 49 sets the penalties for breaches by audit companies or other mandated persons of their obligations. Anyone who wilfully as an auditor or other mandated person seriously violates the supervisory provisions by falsely stating essential information in the audit report or withholding essential information; failing to make a mandatory report to ROHMA; or failing to make an order to the audited supervised person or entity is liable to a custodial sentence of up to three years or to a monetary penalty.

Article 50 deals with the annual accounts. For all four provisions, in the event of a repeat offense within five years of a prior conviction, the sentence will not be monetary.

Under article 51, anyone who fails to comply a legally enforceable ruling issued by ROHMA containing notice of the penalties under this article or with a decision of the appeal courts is prohibited from acting as a director on the board of any Swiss company for a period of five years.

Article 52 grants jurisdiction to the Federal Department of Justice and Police for prosecution and judgment. The Federal Act of 22 March 1974 on Administrative Criminal Law applies unless this Act or the Commodities Act provide otherwise. Where proceedings before the courts are requested or if the Federal Department of Justice and Police is of the view that the requirements for a custodial sentence or a custodial measure are met, the offence is subject to federal jurisdiction. In such a case, the Federal Department of Justice and Police shall refer the files to the Office of the Attorney General of Switzerland for proceedings before the Federal Criminal Court.

Article 53 deals with the issue of joinder of proceedings. In a criminal case, if both the jurisdiction of the Federal Department of Justice and Police and federal or cantonal jurisdiction apply, the Federal Department of Justice and Police may order that the prosecution be unified under the prosecution authority already dealing with the case. The Appeals Chamber of the Federal Criminal Court decides on any disputes between the Federal Department of Justice and Police and the Office of the Attorney General of Switzerland or the cantonal authorities.  Furthermore, article 54 clarifies that the right to prosecute offences under this Act prescribes after seven years.

Chapter 5 Procedure and Right of Appeal

Article 55 states that the procedure is governed by the provisions of the Federal Act of 20 December 1968 on Administrative Procedure. Article 56 sets out the different remedies. The contesting of ROHMA rulings is governed by the provisions on the administration of federal justice. ROHMA is entitled to appeal to the Federal Supreme Court.

Chapter 6 Final Provisions

Section 1 Execution

Article 57 requires ROHMA to provide a yearly report of all activities to the government. Article 58 is devoted to the provisions on execution. It states that is for the Federal Council issues the implementing provisions. Furthermore, the Federal Council may authorise ROHMA in matters of limited importance, and in particular in predominantly technical matters, to issue implementing provisions to this Act and to the Commodities Act. Article 59 clarifies that the execution of the present act and the Commodities Act lies in ROHMA’s competence. Finally, article 60 confirms that the present law is subject to an optional referendum and that the Federal Council determines the date on which this Act comes into force.