This glossary explains the terms that portfolio managers, trustees and managers of collective assets in Switzerland need most often when dealing with supervisors, auditors and clients. Each entry starts with a definition in one or two sentences, states the legal basis with the article and a link to the official legal text, and refers to the page that covers the topic in depth. The terms are listed in alphabetical order.
Terms from A to Z: AMLA · Anti-money laundering unit · Client adviser · Client segmentation · Compliance function · Compliance outsourcing · Conflict of interest · Custodian bank · External asset manager (EAM) · FinIA · FINMA · FinSA · Guarantee of irreproachable business conduct · Internal control system (ICS) · Manager of collective assets · Ombudsman · Opting out and opting in · Outsourced compliance officer · Portfolio manager · Professional indemnity insurance · Register of advisers · Registration body · Risk management · Rules of conduct · Second line of defence · Self-regulatory organisation (SRO) · Supervisory organisation (SO) · Trustee
AMLA
The AMLA (Federal Act on Combating Money Laundering and Terrorist Financing, Anti-Money Laundering Act, SR 955.0) is the Swiss act that governs the fight against money laundering and terrorist financing and ensures due diligence in financial transactions. It requires financial intermediaries – including portfolio managers and trustees – to verify the identity of the contracting party, establish the identity of the beneficial owner, take organisational measures and report well-founded suspicions.
Legal basis: Art. 1 and 2 AMLA, Art. 3, 4, 8 and 9 AMLA
More on this: Swiss AML Act and sanctions explained
Anti-money laundering unit
The anti-money laundering unit (AML unit) is the unit of one or more qualified persons designated by a financial intermediary to advise management and line managers on combating money laundering and terrorist financing, prepare the internal directives and plan and monitor internal training. For financial intermediaries supervised by FINMA, the AMLO-FINMA governs the unit; for members of a self-regulatory organisation, the SRO's regulations do.
Legal basis: Art. 8 AMLA, Art. 24 and 25 AMLO-FINMA (German version)
More on this: AML advisory for portfolio managers
Client adviser
Client advisers are natural persons who perform financial services on behalf of a financial service provider or in their own capacity as financial service providers. They must have sufficient knowledge of the FinSA rules of conduct and the expertise required for their activity and, where registration applies, be entered in the register of advisers.
Legal basis: Art. 3 let. e FinSA, Art. 6 FinSA, Art. 28 FinSA
More on this: Swiss client advisor register: FinSA training
Client segmentation
Client segmentation is the assignment of a financial service provider's clients to one of the three FinSA segments: retail clients, professional clients and institutional clients. The segment determines the extent to which the rules of conduct apply; providers that treat all clients as retail clients may refrain from segmentation.
Legal basis: Art. 4 FinSA, Art. 20 FinSA
More on this: FinSA: Swiss rules of conduct explained
Compliance function
The compliance function is the task within a financial institution of ensuring and monitoring compliance with legal and internal provisions. For portfolio managers and trustees, it is part of the effective internal control structure and may be carried out by a qualified manager or delegated to suitably qualified employees or to a qualified external entity.
Legal basis: Art. 21 FinIA, Art. 26 FinIO
More on this: Compliance services in Switzerland
Compliance outsourcing
Compliance outsourcing is the delegation of the compliance function, or of individual compliance tasks, to a qualified external entity. The financial institution selects the entity carefully and instructs and monitors it.
Legal basis: Art. 14 FinIA, Art. 21 para. 2 FinIA
More on this: Compliance outsourcing in Switzerland
Conflict of interest
A conflict of interest is a situation in which a financial service provider, when providing a financial service, has an interest or incentive that runs counter to the interests of its clients – for example a financial advantage to the detriment of clients or a benefit from a third party. Financial service providers take appropriate organisational measures against conflicts of interest and disclose any remaining disadvantage to clients.
Legal basis: Art. 25 FinSA, Art. 24 FinSO
More on this: FinSA: Swiss rules of conduct explained
Custodian bank
The custodian bank is the bank that holds the assets of a portfolio manager's clients in their accounts and custody accounts and executes the portfolio manager's orders. As a bank, it requires a FINMA licence; it governs its cooperation with the portfolio manager by contract.
Legal basis: Art. 3 BankA (licence, German version); the law defines the custodian bank only for collective investment schemes (Art. 72 CISA)
More on this: Compliance for external asset managers
External asset manager (EAM)
An external asset manager (EAM) is a portfolio manager independent of any bank who manages clients' assets on the basis of a mandate and a power of attorney, while the assets are held with a custodian bank. Under supervisory law, an EAM is a portfolio manager under FinIA and requires a FINMA licence.
Legal basis: Art. 17 para. 1 FinIA, Art. 5 FinIA
More on this: Compliance for external asset managers
FinIA
The FinIA (Federal Act on Financial Institutions, Financial Institutions Act, SR 954.1) is the Swiss act that sets out the requirements for the activities of financial institutions: portfolio managers, trustees, managers of collective assets, fund management companies and securities firms. It aims to protect investors and clients of financial institutions and to ensure the proper functioning of the financial market.
Legal basis: Art. 1 and 2 FinIA; implementing provisions in the FinIO
More on this: FinIA: licensing and supervision explained
FINMA
FINMA (Swiss Financial Market Supervisory Authority) is a public law institution with its own legal personality and its seat in Bern that supervises the financial market under the financial market acts. Among other things, it grants licences to portfolio managers, trustees and managers of collective assets, authorises supervisory organisations and recognises self-regulatory organisations.
Legal basis: Art. 5 and 6 FINMASA, Art. 43a FINMASA, Art. 5 FinIA, Art. 18 AMLA
More on this: FINMA and FMA licence for asset managers
FinSA
The FinSA (Federal Act on Financial Services, Financial Services Act, SR 950.1) is the Swiss act that sets out the requirements for providing financial services honestly, diligently and transparently and governs the offering of financial instruments. It aims to protect the clients of financial service providers and covers, among other things, client segmentation, the rules of conduct, the register of advisers and ombudsmen.
Legal basis: Art. 1 FinSA; implementing provisions in the FinSO
More on this: FinSA: Swiss rules of conduct explained
Guarantee of irreproachable business conduct
The guarantee of irreproachable business conduct is a licensing requirement under which a financial institution and the persons responsible for its administration and management must provide a guarantee of irreproachable business conduct. These persons must also enjoy a good reputation and have the specialist qualifications required for their functions; qualified participants must likewise enjoy a good reputation.
Legal basis: Art. 11 FinIA
More on this: Portfolio manager licence in Switzerland: how to become licensed
Internal control system (ICS)
The internal control system (ICS) is the set of processes, controls and responsibilities with which a financial institution ensures compliance with legal and internal provisions and the proper conduct of its business. Portfolio managers and trustees have an effective internal control structure; the persons performing it are not involved in the activities they monitor.
Legal basis: Art. 21 FinIA, Art. 26 FinIO
More on this: Risk management outsourcing in Switzerland
Manager of collective assets
A manager of collective assets is a person who manages assets on a commercial basis in the name and on behalf of collective investment schemes or occupational pension schemes. Managers of collective assets are supervised directly by FINMA; those who stay within certain thresholds for the assets under management – for collective investment schemes, with qualified investors only – are deemed portfolio managers under Art. 17 para. 1 FinIA.
Legal basis: Art. 24 FinIA, Art. 61 para. 3 FinIA
More on this: Manager of collective assets licence
Ombudsman
An ombudsman under FinSA is a body recognised by the Federal Department of Finance (FDF) that settles disputes over legal claims between clients and financial service providers in mediation proceedings. Financial service providers that also serve retail clients must affiliate to an ombudsman at the latest when they commence their activity.
Legal basis: Art. 74 FinSA, Art. 77 FinSA, Art. 84 FinSA
More on this: FinSA: Swiss rules of conduct explained
Opting out and opting in
Opting out and opting in refer to a client's declaration to be assigned to a different FinSA client segment. By opting out, high-net-worth retail clients can be treated as professional clients; by opting in, professional clients that are not institutional clients choose the protection of retail clients – in both cases in writing or in another form demonstrable via text.
Legal basis: Art. 5 FinSA
More on this: FinSA client segmentation: retail, professional, institutional
Outsourced compliance officer
An outsourced compliance officer, also called an external compliance officer, is a qualified person outside the institution who performs the compliance function of a financial institution under a mandate and acts as a fixed point of contact. The term is not defined by law; for portfolio managers and trustees, the model is based on delegation to a qualified external entity.
Legal basis: Art. 21 para. 2 FinIA, Art. 14 FinIA
More on this: Outsourced compliance officer in Switzerland
Portfolio manager
A portfolio manager is a person mandated to manage assets on a commercial basis in the name of and on behalf of clients. Portfolio managers require a FINMA licence and are subject to ongoing supervision by a supervisory organisation; persons who exclusively manage assets of persons with whom they have economic or family ties are outside the scope of FinIA.
Legal basis: Art. 17 para. 1 FinIA, Art. 2 para. 2 let. a FinIA, Art. 61 FinIA
More on this: FINMA portfolio manager licence
Professional indemnity insurance
Professional indemnity insurance covers the statutory liability for financial losses arising from a breach of professional duties of care as a financial service provider or client adviser. It is a condition for entry in the register of advisers, alternatively to equivalent financial collateral; portfolio managers and trustees must have adequate collateral or take out professional liability insurance.
Legal basis: Art. 29 para. 1 let. b FinSA, Art. 32 FinSO, Art. 22 para. 2 FinIA
More on this: Swiss client advisor register: FinSA training
Register of advisers
The register of advisers, often called the Swiss client adviser or client advisor register, is the register in which client advisers of Swiss financial service providers not supervised under Art. 3 FINMASA, and of foreign financial service providers, must be entered before working in Switzerland. Advisers are registered if they prove the required knowledge, professional indemnity insurance or equivalent collateral and, where required, affiliation to an ombudsman.
Legal basis: Art. 28–31 FinSA
More on this: Swiss client advisor register: FinSA training
Registration body
A registration body is a body licensed by FINMA that keeps the register of advisers and enters client advisers once the registration conditions are met. It is organised so as to fulfil its tasks independently and, like the persons responsible for its management, must provide the guarantee of irreproachable business conduct.
Legal basis: Art. 31 FinSA
More on this: Swiss client adviser register: who must register and how
Risk management
Risk management is the identification, limitation and monitoring of a financial institution's risks within a defined risk tolerance. Portfolio managers and trustees have an appropriately defined risk management system, set out its main features and determine their risk tolerance; the tasks may be delegated to qualified employees or to a qualified external entity.
Legal basis: Art. 21 FinIA, Art. 26 FinIO
More on this: Risk management outsourcing in Switzerland
Rules of conduct
The rules of conduct (officially the code of conduct) are the supervisory duties under FinSA that financial service providers observe towards their clients when providing financial services: information, appropriateness and suitability checks, documentation and rendering of account, and transparency and care in client orders. Their scope depends on the client segment; they do not apply to transactions with institutional clients.
Legal basis: Art. 7–20 FinSA
More on this: FinSA: Swiss rules of conduct explained
Second line of defence
The second line of defence refers to the independent control functions compliance and risk management in the three lines of defence model; they monitor the operational business units as the first line, while audit forms the third line. The term comes from governance practice and is not defined by law; for portfolio managers and trustees, it corresponds to the principle that persons performing risk management or internal control tasks are not involved in the activities they monitor.
Legal basis: Art. 21 para. 3 FinIA
More on this: Compliance outsourcing in Switzerland
Self-regulatory organisation (SRO)
A self-regulatory organisation (SRO) is an organisation recognised by FINMA that monitors whether its affiliated financial intermediaries comply with their duties under the Anti-Money Laundering Act. Financial intermediaries under Art. 2 para. 3 AMLA must affiliate to an SRO; portfolio managers and trustees licensed by FINMA are supervised for their AMLA duties by FINMA and their supervisory organisation.
Legal basis: Art. 14 AMLA, Art. 18 AMLA, Art. 24 AMLA
More on this: SRO affiliation in Switzerland (AMLA)
Supervisory organisation (SO)
A supervisory organisation (SO) is an organisation with its registered office in Switzerland that performs the ongoing supervision of portfolio managers and trustees. It requires FINMA authorisation before starting its supervisory activity, is supervised by FINMA and may also be recognised as a self-regulatory organisation under AMLA.
Legal basis: Art. 61 FinIA, Art. 43a FINMASA
More on this: FinIA: licensing and supervision explained
Trustee
A trustee is a person who on a commercial basis manages or holds a separate fund for the benefit of the beneficiaries or for a specified purpose based on the instrument creating a trust within the meaning of the Hague Trust Convention of 1 July 1985. Trustees are financial institutions under FinIA, require a FINMA licence and are subject to ongoing supervision by a supervisory organisation.
Legal basis: Art. 17 para. 2 FinIA, Art. 61 FinIA
More on this: FINMA portfolio manager licence
Knowledge areas for further reading
The terms come from three areas of law that Peak Compliance covers in dedicated knowledge areas with legal provisions and articles:
FinSA
client segmentation, rules of conduct, register of advisers and ombudsmen at a glance.
Learn more →FinIA and supervision
licensing, organisation, guarantee and supervisory organisations explained concisely.
Learn more →Anti-money laundering (AMLA)
due diligence, AML unit, SROs and sanctions for financial intermediaries.
Learn more →Would you like to place a term in the context of your institution or clarify a compliance question? Talk to us.
At a glance
- Content: 28 terms from FinIA, FinSA, AMLA and Swiss supervisory practice, in alphabetical order.
- Structure: definition in one or two sentences, legal basis with the article, link to the page that covers the topic in depth.
- Legal status: legal texts checked on fedlex on 7 November 2026 (FinIA, FinSA and AMLA as amended on 1 October 2026); the English versions on fedlex are for information only, the German, French and Italian texts are authoritative.
- Languages: English, German and French.
Frequently asked questions
What does the compliance glossary for portfolio managers cover?
The compliance glossary for portfolio managers explains 28 key terms from FinIA, FinSA, AMLA and Swiss supervisory practice – from the supervisory organisation and the register of advisers to the manager of collective assets. Each entry contains a short, neutral definition, the legal basis with the article and a link to the page that covers the topic in depth. The legal texts were checked on fedlex in the version in force on 7 November 2026.
What is the difference between a supervisory organisation and an SRO?
A supervisory organisation (SO) is authorised by FINMA and performs the ongoing supervision of portfolio managers and trustees (Art. 61 FinIA, Art. 43a FINMASA). A self-regulatory organisation (SRO) is recognised by FINMA and monitors whether its affiliated financial intermediaries under Art. 2 para. 3 AMLA comply with their anti-money laundering duties (Art. 14, 18 and 24 AMLA). A supervisory organisation may also be recognised as an SRO.
What does second line of defence mean?
Second line of defence refers to the independent control functions compliance and risk management in the three lines of defence model; they monitor the operational business units as the first line, while internal or external audit forms the third line. The term comes from governance practice and is not defined by law. For portfolio managers and trustees, it corresponds to the principle that persons performing risk management or internal control tasks are not involved in the activities they monitor (Art. 21 para. 3 FinIA).
What does guarantee of irreproachable business conduct mean?
The guarantee of irreproachable business conduct is a licensing requirement under Art. 11 FinIA: the financial institution and the persons responsible for its administration and management must provide a guarantee of irreproachable business conduct. These persons must also enjoy a good reputation and have the specialist qualifications required for their functions. Qualified participants in the institution must likewise enjoy a good reputation.
Who can opt out under FinSA?
High-net-worth retail clients and private investment structures created for them can declare that they wish to be treated as professional clients (opting out, Art. 5 para. 1 FinSA). A person is deemed high-net-worth if they credibly declare that they have certain assets and, at the lower threshold, the necessary knowledge. The declaration must be made in writing or in another form demonstrable via text; conversely, professional clients can choose retail client protection by opting in.
Sources
- Financial Institutions Act (FinIA, SR 954.1)
- Financial Institutions Ordinance (FinIO, SR 954.11)
- Financial Services Act (FinSA, SR 950.1)
- Financial Services Ordinance (FinSO, SR 950.11)
- Anti-Money Laundering Act (AMLA, SR 955.0)
- FINMA Anti-Money Laundering Ordinance (AMLO-FINMA, SR 955.033.0) – official German version
- Financial Market Supervision Act (FINMASA, SR 956.1)
- Banking Act (BankA, SR 952.0) – official German version
- Collective Investment Schemes Act (CISA, SR 951.31)
