When asked, the only thing about himself that Schwarz was willing to say was that he was Neo-Germany's Schwarz Bruder and that was all anyone needed to know.
So why the mask? The secrecy? The mystery?
Schwarz Bruder, as Neo-Germany knew him, once fought the Devil Gundam. He was a large burly man with huge eyebrows and a mustache. And that silly mask. He died in that battle and gave life to the Schwarz Bruder we know.
Using the Devil Gundam, the Human Battery Kyoji Kasshu transfered his essense into the body of Schwarz. It took on his appearance, his memories, his personality, his love for his brother Domon and all of Kyoji's knowledge of the Devil Gundam.
And thus the Schwarz we know was created.