Switzerland has shared plans to regulate artificial intelligence (AI) by adopting the Council of Europe’s AI Convention and making necessary changes to Swiss law. The goal is to address emerging risks while fostering innovation, the Federal Council said on February 12, 2025.

Switzerland will adopt a balanced approach that combines legal rules with flexible, industry-led measures. This approach will focus on ensuring international competitiveness, protecting fundamental rights, including economic freedom, and increasing public trust in AI, the government said.

The country will incorporate the AI Convention into its legal system, with the Federal Department of Justice and Police (FDJP) tasked to draft a law to implement the framework by the end of 2026. The key focus areas will include transparency, data protection, non-discrimination, and supervision, the Federal Council said.

The bill will define the necessary legal measures, in particular in the areas of transparency, data protection, non-discrimination and supervision. The framework will primarily apply to state actors, the government said.

Additionally, while key areas relevant to fundament rights, such as data protection, will be subject to general, cross-sectoral regulation, targeted rules will be developed for specific industries like healthcare and transport.

Alongside legal regulations, the Federal Department of the Environment, Transport, Energy and Communications (DETEC), together with the FDJP, the Federal Department of Foreign Affairs (FDFA) and the Federal Department of Economic Affairs, Education and Research (EAER), will draft a plan by the end of 2026 for non-legally-binding measures, which may include self-disclosure agreements or industry solutions.

This means that Switzerland will not rely solely on strict laws to regulate AI but will also introduce voluntary guidelines and industry-led initiatives, a strategy which aims to encourage companies to comply with ethical AI practices without immediate legal pressure.

The government said that a key priority will be to ensure that the Swiss AI framework align with those of its main trading partners. Feedback from both internal and external stakeholders will be sought.

Response from the banking industry

The combination of legally binding and non-binding measures is intended to provide a more robust legal framework while offering flexibility to businesses to experiment with and implement innovative AI applications.

This approach is praised by the Swiss banking sector. In a February 14, 2025 blog post, the Swiss Bankers Association (SBA) states that existing laws on data protection, financial markets, fair competition, and copyright already provide a sufficient legal foundation.

The trade group supports the government’s strategy of adopting technology-neutral, principles-based, and targeted regulations rather than a detailed and exhaustive framework like the European Union (EU) AI Act. This approach ensures legislative adjustments are made only when necessary, based on regulatory impact assessments, preventing overregulation while effectively addressing emerging AI risks.

According to the SBA, this strategy will preserve economic freedom, foster innovation, and allow Switzerland to maintain its business-friendly and innovation-driven environment.

The financial sector is a promising area for AI applications due to the large amounts of data it handles, the organization says. Currently, local banks are cautiously integrating AI into tasks such as transaction monitoring to, for example, combat money laundering, detect and prevent fraud, identify clients, automate the processing of documents and more, and query internal knowledge databases.

The trade group highlights that Swiss financial institutions already have extensive experience of handling data confidentially and managing operational risks. Since the sector has effective, proportionate and risk-based rules in place that also apply to the use of AI, the SBA recommends that the government examine whether these rules can be established across all sectors of business. The goal would be to ensure fair competition and benefit all businesses and consumers by maintaining consistent AI standards across different sectors.

Adoption of AI has surged in recent years, with the financial services industry emerging as a leading adopter of the technology due to its potential to boost productivity and enhance customer experience. While AI offers transformative benefits for economies and societies, the technology also introduces a number of challenges that have prompted regulators worldwide to introduce AI-specific regulations.

The EU has positioned itself as a global leader in AI regulation. The EU AI Act, which came into force on August 01, 2024, offers a comprehensive framework aimed at addressing AI risks while fostering innovation. It classifies AI systems into four categories: prohibited, high-risk, limited-risk, and minimal-risk.

The UK, meanwhile, has taken a more principles-based approach to AI regulation, opting instead for non-binding guidelines for AI use in financial services and highlighting fairness, transparency, and accountability. This flexible approach aims to allow financial institutions to innovate while adhering to regulatory expectations.

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