Legal Privilege In Internal Investigations: An Update From Switzerland

As previously reported ( link), the Swiss Federal Supreme Court in a 2016 decision (1B_85/2016) took a rather narrow approach to the scope of legal privilege in connection with anti-money laundering investigations, suggesting that no privilege could be claimed with respect to a bank's internal monitoring, controlling and documentation duties arising as a matter of prudential regulation, namely in relation to politically exposed persons ("PEPs"). To the extent that external lawyers are instructed to carry out such investigations on behalf of a bank, they are, according to the 2016 decision, deemed to exercise an "atypical" activity which, like asset management activities or director roles, is not protected by legal privilege. In passing, the Federal Supreme Court also suggested that pure fact-finding activities should anyway not qualify as legal advice covered by legal privilege. The latter observations in particular caused a bit of a stir in the legal and compliance