Data Protection for Banking Clients: Swiss FADP vs GDPR

The Critical Intersection of Banking and Data Protection

As someone deeply immersed in the Swiss financial sector, I’ve witnessed firsthand how the protection of sensitive banking information has become one of the most crucial concerns for both institutions and clients. When you entrust your financial data to a bank, you’re sharing some of your most sensitive personal information—and you deserve to know exactly how it’s protected.

The digitalization of banking has revolutionized how we manage finances, but it has also created new vulnerabilities. Every day, financial institutions process enormous volumes of sensitive client data, all while facing sophisticated cyber threats, potential internal breaches, and the risk of accidental disclosures.

In response to these challenges, two major regulatory frameworks have emerged to safeguard your information: Switzerland’s Federal Act on Data Protection (FADP) and the European Union’s General Data Protection Regulation (GDPR). In 2023, Switzerland revised its FADP to better align with the GDPR—but crucial differences remain that every banking client should understand.

The Swiss Federal Act on Data Protection (FADP): Your Swiss Data Shield

Scope and Application

The FADP serves as Switzerland’s cornerstone legislation for data privacy, designed specifically to protect the fundamental rights and personality of individuals. In September 2023, Switzerland implemented a significantly revised version of this law to better align with international standards.

What makes the FADP particularly powerful is its extraterritorial reach. This means that even if a bank operates outside Switzerland, if it processes the personal data of Swiss citizens, it falls under FADP jurisdiction. The law applies based on what’s called the “principle of effects”—if data processing affects individuals in Switzerland, the FADP applies regardless of where the processing occurs.

There are some exemptions, however. The FADP doesn’t apply to:

• Personal data processed by individuals exclusively for personal use
• Data processed by the Federal Assembly during deliberations
• Data processed by organizations with immunity under the Host State Act

What Counts as Protected Data?

Under the FADP, “personal data” refers to any information relating to an identified or identifiable person. What’s particularly noteworthy about the Swiss approach is its expanded definition of sensitive personal data, which includes:

• Religious, philosophical, political, or trade union views or activities
• Health-related information
• Data concerning the private sphere
• Racial or ethnic origin
• Genetic and biometric data
• Social security measures
• Administrative and criminal proceedings or sanctions

This broader definition of sensitive data represents Switzerland’s unique approach to privacy protection, offering specific safeguards for categories like administrative proceedings that other jurisdictions might not explicitly protect.

The FADP’s Core Principles

When working with clients in Switzerland, I always emphasize these fundamental FADP principles that govern how their data must be handled:

1. Lawfulness and good faith: All processing must comply with the law and be conducted honestly
2. Proportionality: Only necessary data should be collected
3. Purpose limitation: Data can only be collected for specific, recognizable purposes
4. Accuracy: Personal data must be correct and up-to-date
5. Storage limitation: Data should only be kept as long as needed
6. Privacy by design and default: Data protection must be integrated from the beginning

Unlike the GDPR, the FADP generally allows processing personal data without a specific legal basis—unless it involves sensitive data or high-risk profiling.

Your Rights as a Banking Client Under FADP

The revised FADP significantly strengthened your rights. As a Swiss banking client, you can:

• Request information about whether and how your data is being processed
• Access your personal data and obtain copies
• Request correction of inaccurate information
• Ask for deletion under certain circumstances (the “right to be forgotten”)
• Request restriction of processing
• Receive your data in a structured, machine-readable format (data portability)
• Object to processing based on legitimate interests or for direct marketing
• Challenge automated decision-making and request human review

These enhanced rights give you meaningful control over how financial institutions handle your personal information.

The GDPR: Europe’s Gold Standard for Data Protection

Scope and Application

Since its implementation in May 2018, the GDPR has transformed the global privacy landscape. This comprehensive regulation applies to the processing of personal data of individuals within the EU and EEA, regardless of where the data controller or processor is located.

The GDPR’s reach extends to organizations outside the EU if they:

• Offer goods or services to individuals in the EU
• Monitor the behavior of EU residents

For Swiss banks serving European clients, this creates significant compliance obligations.

What Data Does the GDPR Protect?

Under the GDPR, personal data is defined as any information relating to an identified or identifiable natural person. The regulation identifies special categories of sensitive data:

• Racial or ethnic origin
• Political opinions
• Religious or philosophical beliefs
• Trade union membership
• Genetic data
• Biometric data used for identification
• Health data
• Data concerning a person’s sex life or sexual orientation

While financial data isn’t explicitly listed as a special category, it often reveals information that falls into these categories through transaction patterns.

The GDPR’s Seven Key Principles

The GDPR is built upon seven fundamental principles that guide all data processing:

1. Lawfulness, fairness, and transparency: Processing must have a legal basis and be transparent
2. Purpose limitation: Data should be collected for specific, legitimate purposes
3. Data minimization: Only process what’s necessary
4. Accuracy: Data must be correct and updated
5. Storage limitation: Keep data only as long as necessary
6. Integrity and confidentiality: Ensure appropriate security
7. Accountability: The controller must demonstrate compliance

A key difference from the FADP is the GDPR’s requirement for a specific legal basis for all processing activities.

Your Rights as a Banking Client Under GDPR

The GDPR grants extensive rights to individuals, empowering them to control their personal data. As a banking client protected by the GDPR, you can:

• Be informed about the collection and use of your data
• Access your personal data
• Correct inaccurate data
• Request erasure (the “right to be forgotten”)
• Restrict processing
• Transfer your data between service providers
• Object to processing
• Challenge automated decision-making and profiling

FADP vs. GDPR: Key Differences That Affect Your Banking Data

When I advise clients on which banking jurisdictions might best meet their needs, understanding the differences between these two regulatory frameworks is essential:

How These Regulations Protect Your Banking Data

The Sensitive Nature of Financial Information

Your banking data reveals intimate details about your life—from spending habits to investment decisions. Under both the FADP and GDPR, this information receives significant protection, though through slightly different mechanisms.

In Switzerland, financial data may fall under the FADP’s broader definition of sensitive personal data, particularly concerning social security measures or the intimate sphere. While the GDPR doesn’t explicitly categorize financial data as a special category, transactions can reveal protected information such as political donations or healthcare spending.

Consent Requirements for Your Banking Data

How banks obtain your permission to use your data differs between these frameworks:

Under the FADP, banks need your explicit consent for processing:

• Sensitive personal data (which may include certain financial information)
• High-risk profiling
• Profiling by federal bodies
• Data transfers to countries lacking adequate protection

The GDPR requires freely given, specific, informed, and unambiguous consent for all processing of personal data, with explicit consent needed for special categories of data. This generally means stricter consent requirements, particularly for marketing activities.

How Long Can Banks Keep Your Data?

Both regulations mandate that banks retain your data only as long as necessary for the original purpose. However, other financial regulations often require banks to keep records for specific periods:

• Anti-money laundering documentation
• Accounting records under the Swiss Code of Obligations
• Tax-related information

Banks must therefore establish clear retention policies that balance data protection requirements with other legal obligations.

When Your Data Crosses Borders

In our interconnected financial world, your banking data frequently travels between countries. Both the FADP and GDPR restrict transfers to countries without adequate data protection:

• Under the FADP, the Swiss Federal Council determines which countries provide adequate protection
• Under the GDPR, the European Commission makes this determination

Transfers to countries deemed inadequate are only permitted with:

• Appropriate safeguards (like standard contractual clauses)
• Binding corporate rules
• Your explicit consent

The Compliance Challenge for International Banks

For banks operating in both Switzerland and the EU, meeting the requirements of both regulations creates significant complexity. Different scenarios trigger different compliance requirements:

• When a Swiss bank processes an EU citizen’s data, the GDPR applies
• When an EU-based bank processes a Swiss citizen’s data, the FADP applies

These banks must navigate differences in:

• Consent requirements
• Data breach notification timelines
• Enforcement mechanisms

To manage these complexities, many international banks adopt comprehensive data governance frameworks aligned with the stricter requirements of either law.

What These Differences Mean for You as a Banking Client

Understanding Your Rights Across Jurisdictions

If you bank across borders, you may find it challenging to understand which regulations protect your data and what rights you have. The differences in definitions, consent requirements, and specific rights can be confusing.

The Cross-Border Data Transfer Puzzle

When your financial data moves between countries, it may be unclear:

• Where your data is being processed
• Which regulations apply at each stage
• What safeguards protect your information during transfers

Different Consent Experiences

You might notice inconsistent experiences when providing consent for data processing:

• Under the GDPR, you might be asked for more detailed consent
• Under the FADP, consent requirements might be less stringent in certain situations

Exercising Your Rights

Requesting access to your data or asking for its erasure becomes more complex in a cross-border context. You might face challenges in:

• Knowing where to submit requests
• Understanding how to follow up
• Navigating different bureaucratic processes

Guidance from Regulatory Authorities

Both Swiss and EU authorities provide valuable guidance for interpreting their data protection laws:

Swiss Guidance

The Federal Data Protection and Information Commissioner (FDPIC) monitors compliance with the FADP and issues:

• Guidelines
• Factsheets
• Recommendations

These resources help banks understand their obligations and implementation strategies.

EU Guidance

The European Data Protection Board (EDPB) ensures consistent application of the GDPR across member states through:

• Guidelines
• Recommendations
• Best practices

These clarify the law and promote uniform understanding of EU data protection rules.

Key Takeaways for Banking Clients

As we navigate this complex regulatory landscape together, here are the most important points to remember:

• Both the FADP and GDPR provide robust protection for your financial data, though with notable differences
• The FADP generally protects Swiss citizens regardless of where the bank is located, while the GDPR protects individuals in the EU
• You have significant rights under both frameworks, including access, rectification, erasure, and objection rights
• When banking across borders, be aware of which regulation applies to your data
• Familiarize yourself with your bank’s privacy policies and consent mechanisms

In today’s interconnected financial world, understanding these regulations empowers you to make informed decisions about your banking relationships and data privacy.

Moving Forward with Confidence

Navigating data protection regulations can be challenging, especially when they interact with the complex world of international offshore banking. At Mamytova Consulting, we specialize in helping clients understand these nuances and find banking solutions that meet their specific needs.

If you are interested in opening a Swiss bank account, at Mamytova Consulting we will be glad to assist you and help you to find an institution that meets your required services. Our team of experts can guide you through the complexities of data protection regulations while ensuring your banking choices align with your privacy preferences and financial goals.